Canadian Dollar Falls Amid Slide In Oil Prices

The Canadian dollar weakened against the other major currencies in the Asian session on Friday as oil prices declined, extending the brutal recent losses amid rising U.S. inventories.

Crude oil for January delivery are currently down $0.18 to $34.77 a barrel. Oil futures settled below $35 a barrel for the first time in six years Thursday.

“At 490.7 million barrels, U.S. crude oil inventories remain near levels not seen for this time of the year in at least 80 years,” said the Energy Information Administration yesterday.

Moreover, the Federal Reserve’s interest rate hike on Wednesday also weighed on the price of oil due to the dollar’s strength and fears that higher interest rates will weaken demand.

Meanwhile, the U.S. Labor Department released a report on Thursday showing a pullback in initial jobless claims in the week ended December 12th. The report said initial jobless claims fell to 271,000, a decrease of 11,000 from the previous week’s unrevised level of 282,000. Economists had expected jobless claims to pull back to 275,000.

Thursday, the Canadian dollar fell 1.00 percent against the U.S. dollar and 0.84 percent against the yen. Meanwhile, the loonie rose against the euro and held steady against the Australian dollar.

In the Asian trading, the Canadian dollar fell to a 4-day low of 87.74 against the yen, from yesterday’s closing value of 87.93. The loonie may test support near the 86.00 region.

Against the U.S. and the Australian dollars, the loonie dropped to 1.3954 and 0.9946 from yesterday’s closing quotes of 1.3936 and 0.9932, respectively. If the loonie extends its downtrend, it is likely to find support around 1.40 against the greenback and 1.00 against the aussie.

The loonie edged down to 1.5127 against the euro, from yesterday’s closing value of 1.5085. On the downside, 1.52 is seen as the next support level for the loonie.

Looking ahead, Eurozone current account data for October is due to be released at 4:00 am ET.

Also at 4 am ET, Austrian central bank chief Ewald Nowotny is expected to speak at press conference on Financial Stability Report, in Vienna.

In the New York session, Canada wholesale sales data for October and CPI data for November and Markit’s flash U.S. PMI reports for December and U.S. Baker Hughes weekly rig count data are slated for release.

At 1:00 pm ET, Richmond Federal Reserve Bank President Jeffrey Lacker is due to speak about the economic outlook for 2016 at the Charlotte Chamber of Commerce.

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