Canadian dollar rose
The Canadian dollar appreciated against the US dollar by almost 1% on January 22, 2016. Crude prices recovered by more than 10% to $32 per barrel. Investors covered short positions after oil prices reached to their lowest level since 2003. Speculations that the long rout in crude prices is over increased as Khalid al-Falih, chairman of the state-owned oil company Saudi Aramco, stated an expectation of a rebound in crude prices after the huge downfall globally. This led to a rise in commodity-related currencies like the Canadian dollar, Russian ruble, and Mexican peso. This year, the fall in commodity prices led to major outflows from emerging market economies’ domestic equity markets. Also, the Bank of Canada’s decision to keep interest rates constant led to gains in the Canadian dollar. The unchanged rate stance shows that Governor Poloz thinks that there’s enough accommodation in the economy to raise the export segment.
Impact on the market
Looking at Canadian ETFs, the iShares MSCI Canada ETF (EWC) rose by 4.0% after the recovery in crude prices on January 22, 2016.
Canadian energy American depositary receipts that traded in US markets were trading on a higher note. Baytex Energy (BTE) and Canadian Natural Resources (CNQ) were trading higher by 17.3% and 5.9%, respectively. On the other hand, Crescent Point Energy (CPG) and Enbridge (ENB) rose by 9.6% and 7.0%, respectively.