Learn about the correlation between oil price and the canadian dollar

Learn which is the correlation between oil price and the canadian dollar

We are going to see the oil price versus the canadian dollar graph and what is the oil price’s effect on Canada. Watch our latest video to see the correlation between oil price and the canadian Dollar

How the correlation oil price – Canadian Dollar affects the canadian Dollar graph

This video is about trading the Canadian dollar in relation to oil. Canada is one of the largest oil producers in the world, and the majority of the country’s oil reserves are contained within its oil sands. Canada is a major exporter of crude oil and, in recent years, the production of oil has increased and is currently producing something around 6 million barrels a day. And according to the Oil&Gas Journal, Canada has around 173 billion barrels of proven oil reserves and at the start of 2015, Canada’s reserves were ranking the third highest in the world.

So Canada is one of only 2 countries among the top 10 proven reserve holders that is not a member of the OPEC Group, which stands for the Organization of the Petroleum Exporting Countries and you just hear it referred to as OPEC. Now, Canada’s proven oil reserves were around 166 billion barrels at the end of 2016. And that has grown from below 10 billion barrels, from 1980 to 2002, and that has largely been due to the oil sand production increases, which accounts for about 97% of proven oil reserves.

Canada is the world’s fourth-largest oil producer behind the US, Saudi Arabia, and Russia. Canada is the third largest exporter of oil and around 99% of its exports go to its gas-guzzling neighbor, the US. So you will understand that the price of oil has a massive impact on Canada’s economy. When oil prices are rising, then the Canadian dollar is rising, and when oil prices are falling, the Canadian dollar is falling. So, the correlation, and you’ll see for obvious reasons, between the Canadian dollar and oil, is very high. Now, with Canada being the largest oil supplier to the US, there is a nearly 97% correlation between the US dollar/Canadian dollar pair and oil. So, when oil goes up, US /Canadian dollar goes down.

Now, let me show you. This is the US dollar/Canadian dollar chart, and I’m just going to show another chart where I can overlay the price of oil, which is the blue line. Here you see, this is the price of US oil here, the blue line here, and the bar chart is the US dollar/Canadian dollar pair. So you can see, when oil is going up, so here’s oil going up, from 2002 to 2008, there’s that steady climb in oil and conversely, there’s the steady fall in the US dollar/Canadian dollar pair. Similarly, when oil went down very sharp, in 2008, then, US dollar/Canadian dollar went up.

So, you can see how close that correlation is, and it’s a correlation to have very firmly in your mind, if you’re ever trading the US dollar/Canadian dollar pair, you will want to have a look at the oil markets to see exactly what the oil markets are doing, because the correlation is so close. In fact, anytime you’re trading the Canadian dollar, because of the impact of oil on the Canadian dollar, you want to have an eye as to what the Canadian dollar is doing. If you don’t, you’re going to get caught out, but if you do, you’re going to find opportunities, and you’re going to get confirmation for trades, without getting stocked out unnecessarily, when a simple look at the oil chart would have prevented any difficulty for you.

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