USDCAD and the Wednesday oil inventory jolt

[Fairman]

USDCAD and the Wednesday oil inventory jolt

At 10:30am New York time every Wednesday, US crude oil inventories are released. Oil moves, and USDCAD often moves with it, since Canada is a major oil exporter and the loonie tends to track crude.

The reaction is not always large, and the relationship has weakened over the years as other factors have taken over. But on a surprising inventory number, the move in USDCAD within the first minute can be sharp.

A typical pattern: a large draw in inventories pushes oil up, the Canadian dollar firms, USDCAD dips, then the move fades if the broader dollar picture disagrees.

Because the data is scheduled and public, it is easy to prepare for. Marking the time on the chart, widening stops or standing aside, and watching oil futures for the initial reaction are all sensible habits.

Other Canada-specific times matter too: Bank of Canada decisions, employment data on the same day as US jobs, and occasional speeches.

One more habit: when the inventory number lands, glance at the crude oil reaction first. If oil barely moves, USDCAD usually follows suit. If oil jumps and the loonie lags, there is often a catch-up move over the next few minutes.

Does the Wednesday inventory number still move USDCAD enough to bother with?