Oil and loonie flying high together again

  • Oil poised for best monthly performance since early 2022
  • Net-long positions in WTI  rise to highest levels in 3 months
  • Goldman says global oil demand has surpassed peak set just before COVID-19

USD/CAD

Canadian dollar

Oil and the loonie are flying high again as global growth prospects improve and on optimism the Fed is done tightening.  The Canadian dollar was weakening last week on fears that the BOC’s tightening cycle is starting to weigh on the economy.   That outlook might change if China delivers massive stimulus and if global disinflation trends remain in place.  The 1.3100 level remains key support for USD/CAD, while 1.3250 provides resistance.

Oil

Crude prices are finishing a solid month on a high note as demand prospects remain impressive and no one doubts that OPEC+ will keep this market tight.  The oil market is seeing the best month since early 2022 as most of the major central banks appear at the tail end of their tightening cycles. 

Also supporting oil was the Goldman Sachs note that suggested we are not at peak demand.  The crude demand outlook is getting a boost on soft landing hopes for the US and Europe.  The ace up the sleeve of oil bulls is that the energy market is still awaiting massive stimulus from China that should boost global growth prospects.  WTI crude has rallied above the $80 level and is trying to make a run towards the $84.50 level.  Exhaustion might settle in until we get beyond Friday’s NFP report. 

Gold

Gold prices are attempting a bullish break out as optimism grows that the major central banks are all approaching the end of their tightening cycles.  The RBA might be one-and-done this week and the BOE might be done after a couple more.  The Fed is clearly waiting on the data, but they might be done if inflation plays nice.   

Gold’s rally could extend if growth prospects turn sour.  If Wall Street starts aggressively in rate cuts by the first quarter of 2024, gold could easily find a home above the $2000 level.  It seems gold will need to wait for Apple’s earnings and the NFP report, before it delivers its next big move. 

Bitcoin

Bitcoin prices softened after Curve Finance announced they suffered a breach.  $50 million have been drained, which led to the over 10% drop with the Curve stablecoin.  This is a blow for Ethereum’s DeFi ecosystem, but not likely to trigger a massive selloff for Bitcoin.  

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.

Ed Moya

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