This Could Crush the Canadian Dollar
The Canadian dollar just can’t get a break. The CAD to USD exchange rate fell below the $0.70 level. This was an unprecedented move. Unfortunately, there could be more downside for the loonie against the greenback.
One of the biggest factors at play when it comes to the CAD/USD is the price of crude oil.
Before going into details, please look at the chart below. It plots the CAD to USD exchange rate (red line) with crude oil prices (green line). At the bottom of the chart, you can see how they correlate.
You see, this chart should really scare you.
The correlation between oil and the CAD to USD exchange rate is very significant—it’s almost perfect. This means that as oil goes down, the Canadian dollar’s value goes down.
Chart courtesy of www.StockCharts.com
With this said, could oil prices fall further? In one simple word, yes. Crude oil prices broke below $30.00 a barrel just recently and they’ve remained around that level.