Eric Theoret, global macro strategist at Manulife Investment Management, told Reuters: “There’s a kink in the CAD-oil relationship. You’re not getting currency strength that will dampen inflation.”
The Canadian dollar was at 1.09 per US dollar, or about 92 cents, the last time oil went above $100 a barrel in 2014. It is currently hovering at 1.28.
Meanwhile, according to data from Refinitiv Eikon, the 3-month rolling correlation between Canadian currency and oil has fallen from 0.9 in December to 0.3, reaching near zero levels indicating no connection.
“What we’ve seen over the past month or two has certainly been a very stable and fairly consistent relationship historically,” Sean Osborne, chief currency strategist at Scotiabank, told the news outlet.
“We’ll probably be in a position here where banks [of Canada] Will not back down against the idea of a stronger Canadian dollar,” he said.
