According to a delegate cited by Bloomberg, OPEC members have reached a deal on cutting oil output by 1.2 million barrels per day to 32.5mpbd. The headline looks good. Back in September, OPEC members discussed a deal for maintaining output at between 32.5 to 33.5 mbpd. So, the announcement is at more ambitious edge of the deal.

Oil prices were already rallying on many optimistic headlines. WTI crude oil reached the August peak of $49 but may already be selling on a “buy the rumor, sell the fact”.

CAD follows oil prices in the wider scheme of things but seems vulnerable. The Canadian dollar had a tendency to fall harder with oil while rise in a more gentle manner when the black gold advanced.

It is important to stress that this is not an official announcement. In addition, there is a great difference between making an announcement and following through. OPEC members have violated their quotas many times in the past.

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The reaction in USD/CAD is somewhat skewed by the Canadian GDP report.

Here is the chart:

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