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By Paul Golden At A Glance The Canadian dollar and Russian ruble, traditionally linked to oil prices, were moved by other factors. OPEC’s decision to cut oil production beginning in January 2019 might have been expected to boost oil-linked currencies, but other factors are taking their toll. The currencies most closely associated with crude oil prices are the Canadian dollar (CAD) and the Russian ruble (RUB), although the former is also heavily influenced by U.S. interest rates. Canadian Dollar Correlation between the CAD and oil has risen in recent months and the loonie has been boosted by a cut in production in Alberta that saw Western Canada Select crude surge more than 70 percent, narrowing its discount to the U.S. benchmark, WTI . However, Vincent Cignarella, currency strategist at Bloomberg notes that trade and fundamentals often have a greater impact on the value of the CAD. A JP Morgan report on the outlook for the CAD in 2019 has USD/CAD remaining elevated at the beginning of the year on weak local oil prices and NAFTA/USMCA concerns before drifting lower as oil prices recover. The report notes CAD’s relative insensitivity to oil prices in 2018, with average correlation this year […]
