Canadian Dollar vs US Dollar and The Price of Oil

Reblogger
Services for Real Estate Pros with HomesByOwner of Toronto

 

Original content by Gina Burgio

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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Comments (2)

Kevin Wood,
Keller Williams Southern Arizona - Tucson, AZ
Tucson, AZ Realtor

Gina,

Informative post. Thank you for the explanation.

Oct 28, 2008 06:02 PM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

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Dec 31, 2017 08:09 PM