Canadian Dollar vs US Dollar and The Price of Oil

By
Mortgage and Lending with VERICO Designer Mortgages Inc.

Many people were wondering last week why the Canadian Dollar started to lose value against the US Dollar, when it appears that the USA was in greater crisis mode in comparison to Canada.

Well here is why....

Canada is one of the world's largest producers of oil and holds oil reserves second only to Saudi Arabia, which makes Canada very reliant on its most prized commodity.  It is also the largest supplier to the world's biggest oil consumer - the United States.  Therfore, rising oil prices tend to be good for Canada/bad for the U.S., while falling oil prices tend to be bad for Canada/good for the U.S.

As you can see from the chart above, price movements USD/CAD and Oil are inversely correlated from each other - meaning as oil trends higher, USD/CAD tends to trend lower and vice versa.

Since January 1988, USD/CAD and Oil have had about a 68% inverse correlation to each other. This is a pretty strong correlation.

 

 

 Gina Burgio

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com

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Each VERICO Broker is an independent owner operator.

  

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. D H 10/22/2008 02:43 PM
  2. Toronto For Sale By Owner 10/24/2008 11:43 PM
Topic:
Mortgage / Finance
Location:
Ontario Hamilton Wentworth County Ancaster West Hamilton Mountain
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Tags:
interest rates
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loans
oil
canada
loan
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usa
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Rainer
102,883
Robert Huntsinger
Empire Realty - Upland, CA
Empire Realty Upland, CA - Full Service at a Discount

Hey Gina,

Very interesting information, I had no clue that Canada was so big in oil, it makes sense of all the currency  movements.

Take care!

RJH

Oct 16, 2008 04:37 AM #1
Rainer
44,199
Kevin McGourty
Realty ONE Group - Phoenix, AZ

I had no idea Canadian was second to Saudia Arabia in being the largest producer of oil. Typical Yankee -- doesn't know there is country north of the U.S.

Oct 16, 2008 04:44 AM #3
Rainer
137,876
Roy A. Peterson
Domicile Analysis of Texas - El Paso, TX
P.R.E.I.

Ok Gina, I guess I just fell off the hay wagon or something, Canada is the second largest oil producer, your kidding right. In our own backyard. Something is definitely wrong here. I read a blog the other day that an individual living in Canada was filling thier gas tank in the USA side because it was cheaper here. They say that the U.S. is Saudi Arabia number one consumer in oil.  Political B.S.

 

                                        ~ All the Best            

Oct 16, 2008 05:01 AM #4
Rainer
29,759
Stephen D White, E-Pro, ABR Cape Cod Real Estate
SDW Realty of Cape Cod - Falmouth, MA

thanks for the statistics Gina

Oct 16, 2008 05:03 AM #5
Rainmaker
238,206
David W. Langford
Promo-Plates car nameplates by Ameri-Plates - Detroit, MI

It may be interesting to some that in Ft. McMurray, AB (the heart of the tar sands mining) a mobile home can sell for more than $400,000.   Oil booms bring with them high home values.

Oct 16, 2008 05:05 AM #6
Rainer
20,726
D H
Beaverton, ON

Great information Gina. Why not edit this post and let others reblog it?

Oct 20, 2008 09:56 AM #8
Rainer
24,428
Gina Burgio
VERICO Designer Mortgages Inc. - Ancaster, ON

As you can see by today's reaction to the Bank of Canada's rate cut, the USD/CAD exchange rate increased (Canadian dollar fell) and the price of Oil fell.

Oct 21, 2008 04:51 AM #9
Anonymous
jim hyatt

So if our dollar is so dependant on the price of oil where does it start? Oil is at 10 dollars is our dollar worth 10 cents. Do we use the over inflated oil price of 145.00/barrel to get our dollar to 1.00...so then when oil hits 200/barrel our dollar will be worth 2.00...yeah right!!

Oil should have never got to 145/barrel and the damn dollar should not be below 95 cents especially with the usa deficeit in the trillions and counting. Whatever A...hole traders took oil to 145/barrel are now playing with the dollar, and yes they should be thrown in jail w/ usa's bank executives...

Oct 22, 2008 04:43 AM #10
Rainer
1,756
Toronto For Sale By Owner
HomesByOwner of Toronto - Toronto, ON

Very interesting correlation!  Nothing like a good chart to help display your finding.

Oct 29, 2008 08:16 AM #11
Rainmaker
221,048
Michael Wayne Jackson
Coldwell Banker - Novato, CA
Realtor - Seniors Real Estate Specialist Novato

Now why aren't these statistics in the news. I learned something new today, thanks for sharing Gina.

Oct 29, 2008 08:29 AM #12
Rainer
1,756
Toronto For Sale By Owner
HomesByOwner of Toronto - Toronto, ON

I told agree with you Mike.  Most people have no idea about currency and commodity movements.

Oct 29, 2008 11:46 AM #13
Rainer
1,756
Toronto For Sale By Owner
HomesByOwner of Toronto - Toronto, ON

Gina, how often do you follow the currency markets and oil prices?  Interested to know how you became aware of this.

Oct 29, 2008 11:59 AM #14
Rainer
1,756
Toronto For Sale By Owner
HomesByOwner of Toronto - Toronto, ON

Interesting article in the Financial Post regarding the history of the Canadian Dollar... http://www.financialpost.com/news/story.html?id=917503

Oct 29, 2008 10:26 PM #15
Rainer
24,428
Gina Burgio
VERICO Designer Mortgages Inc. - Ancaster, ON

Thank you for the article.

Nov 05, 2008 08:24 AM #16
Anonymous
CH

Roy> Canada has the second largest RESERVES of oil. Canada is only something like the 8th or 9th largest producer of oil in the world, but moving upward. Also, the average tax on Canadian gasoline is a bit higher than the US. Compare to the US: They are the second largest producer of oil but have something like the 13th largest reserves in the world.

Nov 12, 2008 05:10 AM #17
Ambassador
2,357,854
Fred Griffin, on leave of absence from ActiveRain
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

    We invite you back to ActiveRain in 2018!

Much has changed since you last posted to ActiveRain.  I encourage you to take another look at the website.  

  Best to you!  

Dec 31, 2017 08:11 PM #18
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