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Canadian Dollar Outlook – Photo: Capital.com, Source: GettyImages Canadian Dollar and Oil Prices Diverge There is still a sense of some new year randomness in price action across the FX space. Yesterday, we saw commodity-linked currencies such as the Canadian Dollar performing well across the board, most notably against the US dollar. Yet this took place while the commodity complex was weakening sharply, particularly the energy complex in which Brent and WTI crude futures fell as much as 5%. USD/CAD vs Brent Crude Oil Looking at past occurrences where the USD/CAD fell over 1% (CAD Stronger = USD/CAD lower) and oil prices dropped at least 2%. There have only been three prior occurrences of this since 2009. 04/01/23 (Yesterday) 26/03/20 20/03/20 08/01/09 Now given the very small sample size, there is no real call to action here, it could simply be a case of randomness. That being said, it does make me somewhat cautious in chasing CAD higher from current levels. The growth outlook remains murky as indicated by yesterday’s ISM manufacturing PMI report, which fell to the lowest level since May 2020. Meanwhile, Saudi Arabia has reportedly lowered all oil prices for Asia further hinting at the mounting […]
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