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Canadian dollar hits 5-week low as oil prices fall

By Reuters_News

14:01, 22 August 2022

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A Canadian dollar coin, commonly known as the
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto, January 23, 2015.

By Fergal Smith

- The Canadian dollar weakened to a five-week low against its U.S. counterpart on Monday, as investors worried about the global economic outlook and awaited an influential central bank conference this week.

Equity markets globally .WORLD fell and the U.S. dollar rose against a basket of major currencies as fears mounted that inflation-busting interest rate hikes in the United States and Europe will weaken the global economy.

"Weaker stocks and softer oil prices remain headwinds for the CAD, and while the BoC (Bank of Canada) policy backdrop remains supportive in broad terms, we feel, there is little opportunity for the CAD to differentiate itself from the USD ahead of the key Jackson Hole event," strategists at Scotiabank, including Shaun Osborne, said in a note.

Federal Reserve Chair Jerome Powell is due to speak at the Jackson Hole symposium in Wyoming on Friday, with expectations growing of further rate hikes rather than a pivot to a more dovish policy.

The price of oil, one of Canada's major exports, dropped 3.1% to $88 a barrel, while the Canadian dollar was trading 0.2% lower at 1.3020 to the greenback, or 76.80 U.S. cents. It touched its weakest level since July 18 at 1.3023.

Oil - Crude

80.34 Price
-1.310% 1D Chg, %
Long position overnight fee -0.0024%
Short position overnight fee -0.0116%
Overnight fee time 22:00 (UTC)
Spread 0.03

US100

11,963.60 Price
-0.470% 1D Chg, %
Long position overnight fee -0.0166%
Short position overnight fee 0.0060%
Overnight fee time 22:00 (UTC)
Spread 3.3

Natural Gas

6.21 Price
-8.960% 1D Chg, %
Long position overnight fee 0.0408%
Short position overnight fee -0.0658%
Overnight fee time 22:00 (UTC)
Spread 0.005

BTC/USD

17,133.95 Price
+0.660% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 66.00

Still, speculators have raised their bullish bets on the Canadian dollar to the highest level since July 2021, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Feb. 2, net long positions had increased to 26,867 contracts from 21,223 in the prior week.

Domestic data on Monday showed that new home prices increased 0.1% in July from June. It was the smallest increase since June 2020.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year touched its highest since July 21 at 2.989% before dipping to 2.970%, up 2.2 basis points on the day.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

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