The USD goes up in the currency market after the release of the positive US labor market data for September last Friday. According to CME Group, after the release of the U.S. labor market data last Friday, probability of the rate hike in December has increased from 63.4% to 65.1%.
Charles Evans, Governor of the Fed Chicago has said on Tuesday that the US economy is stable and the rise in the interest rates in December is appropriate. According to Mr Evans, US labor market is improving, and the data on nonfarm payroll released last Friday has become the powerful evidence in favor of this fact.
Although probability of the rate hike in November has dropped to 8%, market participants still believe that the rate hike will take place at the US Fed meeting in December. Due to this anticipation the USD continues to rise in the currency market.
The Canadian dollar is a commodity currency; therefore it reacts to the changes in the oil market. Canada is a exporter of oil and oil is an important item of revenue for Canada. Oil prices are strongly correlated with the price of the Canadian dollar.
Yesterday’s speech by President of Russia at the World Energy Congress in Istanbul has contributed to a dramatic rise in oil prices. Futures for crude oil Brent at ICE Futures Europe has grown by 2.3% to $53.14 per barrel. Spot price of crude oil Brent has soared up to 53.70.
Following the rise in the price of oil, the price of the Canadian dollar also went up.
Yesterday the pair USD/CAD declined by 75 points to the level of 1.3175, despite the rise of the USD against other currencies.
With the opening of today’s session the price of crude oil Brent has maintained around the level of 53.00USD, while the USD is rising in the foreign exchange market.
Apparently, the pair USD/CAD will "catch up" with other currency pairs, if the price of oil will not rise again.
If the rise in oil price continues, the pair USD/CAD may go up to the level of 1.3250 (yesterday's closing price).