by Anna Golubova

WBP Online correspondent in Ottawa

The Canadian dollar slipped to a one-month low as oil prices dragged the commodity currency down amid investors’ risk-aversion.

As Canada is one of the major global exporters of the commodity, the loonie is highly vulnerable to oil prices compared to the aussie.

Traders are also currently looking to minimize risks when investing in a particular currency, Bank of Nova Scotia’s chief currency strategist Camilla Sutton told WBP Online. Aussie faring a little bit better. Right now we are in a very volatile market, where investors are looking to de-risk and closing out open positions, she said.

The loonie was down 0.83%, trading at C$0.9926 against the aussie during the North American afternoon session, after hitting a low of $0.9954.

Commodity risk

Oil prices hit multi-year lows earlier on Wednesday, putting downwards pressure on the Canadian dollar, which is closely tied to oil prices since Canada is one of the major crude exporters worldwide.

Earlier in the session, WTI attacked $80 a barrel, steady at a two-year low, and Brent was at a four-year low, amid muted oil demand outlook and ample supply from the US and Russia along with disappointing data from the euro zone.

The next closely watched data release will be US oil stockpiles, which are expected to rise.

Meanwhile, Canada’s inflation figures, scheduled to be published on Friday, will be closely observed. The release will be the main clue as to the country’s future monetary policy direction ahead of the Bank of Canada’s (BoC) rate announcement on October 22.

Economists are expecting to see annual inflation decelerating to 2% in September and the BoC Core Consumer Price Index remaining at 2.1%.

The Australian dollar tumbled earlier in the week as Reserve Bank of Australia (RBA) officials attempted to talk down the currency, stating that the currency was still overvalued.

But, in the next few weeks the aussie is estimated to rise in light of stable RBA rates. We suspect AUD will push higher in coming weeks, backed by improved commodity demand and a stable RBA rate outlook, strategist at Westpac Banking in Sydney, Sean Callow, said in a research note.

To contact the author of this story, email anna.golubova@wbponline.com