Stimulus & Inflation, Oil Reserves & the Bank of Canada

11 thg 3, 2021

Yesterday was marked by the vote in the House of Representatives on the stimulus package in the United States (a version of the bill after amendments in the Senate), as well as by the US inflation statistics.

And if everything's clear about the first event the beginning (the Democrats completely control the Chamber and naturally voted “for”), then the inflation data openly frightened the markets.

But yesterday's statistics showed that they were worried in vain. The inflationary spiral does not unfold. The core consumer price index even came out less than the average forecasts. So, everyone breathed out in unison and returned to buying on the stock market, which was also facilitated by the decline in the yield of US Treasury bonds.

For the second week in a row, US oil inventories have been showing the growth measured in double-digit million barrels. Last week, data from the EIA showed an increase of 21.5 million, and yesterday's data showed almost 14 million. That is, in two weeks, oil reserves in the US increased by 35 million barrels. The reason is that the US abnormal frosts States led to a temporary paralysis of the US oil refining industry. And so far, it's not been able to fully recover. The stock figures are exclusively bearish, so oil sales from the current ones still seem to us a promising trading idea despite the results of the OPEC Plus meeting last week.

The decline in oil is likely to pull down the Canadian dollar, which traditionally strongly correlates with the dynamics of prices for black gold. Moreover, following the results of yesterday's meeting of the Bank of Canada, it didn't change the parameters of monetary policy, which means that there is no point in expecting any help for the Canadian dollar.