Falling Oil prices drag Canadian dollar lower

Oil prices play vital role for the commodity currencies. One of them is Canadian dollar, which has reached the lowest level against the USD in over 12 years. One of the reasons for such depreciation is Bank of Canada's rate cut expectation as the bank is likely to be of the view that the Canadian economic outlook has deteriorated further as a result of the low energy prices.

In January 2015, BOC has surprised the market with rate cut. Falling oil prices is not the only reason for economy slow down. Recently trade balance data released with positive numbers at $-2.0 B which showed the first rise in exports in three months. If this positive development continues the BoC will stick to its positive economic outlook.