The Canadian Dollar spent Thursday strengthening against both the Pound (CAD/GBP) and the US Dollar (CAD/USD) as oil prices hit $80 per barrel for the first time since 2014.
Oil Hits $80 for the First Time since 2014, CAD Exchange Rate Stronger
The shift higher in oil came after French energy supplier, Total, said it was considering pulling out of the Iranian gas deal by the end of the year.
Total made a statement saying:
‘Total will not continue with the SP11 project and will have to unwind all related operations before 4 November 2018, unless Total is granted a specific project waiver by US authorities with the support of the French and European authorities.’
The move shattered hopes that Europe would be able to maintain it’s current situation with Iran after Washington recently announced it would be pulling the US out of the nuclear deal. Trump also issued a warning suggesting that businesses across the globe must cease trading with Iran and threatened fines and other repercussions for those that continue.
Oil analyst Bjarne Scheildrop said to the Financial Times:
‘Total’s action… Backs up the idea that no one sees an easy solution here and that there is little expectation of US leniency. Whatever the politicians in Europe are saying, the private companies are just pulling out and folding the cards.’
UK Inflation to Erode Real Wages – Macron Asks for EU Business Protection
Higher oil prices are likely to create stubbornly high inflation in the UK, which will limit household income and impact real wages. Meanwhile, French President Emmanuel Macron has called for the EU to protect those businesses that still want to deal with Iran.
‘International companies with interests in many countries make their own choices according to their own interests. They should continue to have this freedom. But what is important is that companies and especially medium-sized companies which are perhaps less exposed to other markets, American or others, can make this choice freely.’
There are a few pieces of US economic data out today which could impact the US Dollar (USD/CAD) exchange rate such as the weekly Initial Jobless Claims and Continuing Claims stats, as well as the Philadelphia Fed Business Outlook and the Leading Index.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate is currently trending at 1.2780. The Pound to Canadian Dollar (GBP/CAD) exchange rate is trading at levels of 1.7245.