OPEC+ extended current production cuts and provided major support to commodity-related currencies.
The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from an earlier one-week high as a sell-off on Wall Street driven by higher bond yields offset surging oil prices. The safe-haven U.S. dollar rallied against a basket of major currencies and Wall Street slumped after remarks from Federal Reserve Chair Jerome Powell disappointed investors worried about rising longer-term U.S. bond yields. "Canadian dollar traders' heads were spinning today in attempting to digest OPEC and Powell at the same time," said Adam Button, chief currency analyst at ForexLive.
Canadian dollar forecasts for the coming months have been raised by strategists, reflecting recent gains for the currency but also expectations commodity prices will benefit from the reopening of the global economy, a Reuters poll showed. Canada is a major producer of commodities, including oil, which has soared about 80% since November, helped by supply cuts from major producers and the prospect of stronger global economic growth this year as COVID-19 vaccines roll out. The United States expects to have enough vaccine for every American adult by the end of May. Canada's vaccination campaign is also ramping up after earlier supply disruptions.