Will the loonie lead crude this time?

Historically, the CAD/USD exchange rate has tracked crude prices reasonably well. Using weekly data going back to 1983, the two series have a 67% correlation. In recent weeks, however, the Canadian has broken out and is powering towards parity with its American counterpart. In contrast, crude oil prices have languished in the $80 range. Will the Canadian dollar take a break from its recent hot streak, or is a rally in crude more likely?

If history serves as any guide, the Canadian dollar has actually led crude prices at major inflection points in the past decade. As highlighted in the chart, in the spring of 2000, the Canadian dollar weakened as the tech bubble burst, but crude oil prices hung tough until November before falling to around $20.  Read More…

This article has 3 Comments

  1. Dejon E

    i read “lead” as the metal material and was like loonie has lead?

  2. Santos Millar

    never knew there was a connection with crude oil prices. interesting read.

  3. Markell

    Historically it has tracked crude well but if 1991 is any indication it is not a given. My guess is i don’t think it will. Market conditions have always had their way with the loonie and it won’t be any different now.

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