Oil prices impact Canadian dollar against USD

Canadian dollar sees comeback after recent dip

The Canadian dollar saw a significant dip over the last week, and is finally surging back to levels congruent with late March.  The federal government budget saw no surprises, with a cautiously optimistic approach to the potential turbulence of a Trump presidency. With an export driven focus and no new environmental rules stiffling growth, the Canadian dollar has managed to climb back.

cad usd forex charts

As an oil exporting nation, the Canadian dollar is quite volatile and dependent on international trends. Oil prices have recently risen which is the major factor behind the surge of the price. The most recent chatter on OPEC is that they will be supporting extended oil outport cuts, which is integral to raising the price of oil. Speculation over the extent of export cuts have been the greatest factor behind recent increases in oil prices, and at the first news that the export cuts could be nixed some forex investors will dump their Canadian currency predicting a substantial drop in prices.

We also need to take into consideration that President Trump’s nationalistic economic policy has seemingly included Canada in an understanding of North America as an allied power. Canada and the US have a longstanding relationship, with even their military and counter-terrorism departments working closely together. This means that as Trump pushes forward with pipelines and other tactics to reduce foreign oil dependency, Canada could be the greatest beneficiery with increased exports.

This graph shows the value of CAD compared to USD, which has suffered slightly recently due to investor speculation that President Trump will be unable to fulfill his lowering of tax promises that caused the USD to rise.

Will CAD rise compared to USD in the coming months? This will depend on how President Trump approaches new challenges both domestically and international. The US dollar is subject to investor whims as they decide whether or not the new President will be able to push forward with economic promises while avoiding international conflict.

The recent tensions with Syria and North Korea put the USD in a complicated position. The way that the current commaner in chief is able to handle international incidents will be important for investor confidence in his ability to improve the American economy.

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