Crude Oil versus $CAD

[Hopalong]

Keep hearing that our Canadian dollar is closely tied to oil prices in US dollars.
Might expect futures prices to reflect this but they predict oil prices to rise about thirty per cent and our dollar only about three percent in next couple of years.
Indicates markets do not have confidence in our government's ability and resolve to maintain our currency value or is there another reason?

[farming101]

Related, but there is a ratio.
Look at oil's big run up from 2003-2008.
Oil went up 450 percent and the CAD went up about 50 percent in relation to the USD.

[Guest]

no shit, all this guys gonna do is spend us into the poorhouse .

[ajl]

There is no will in Canada to maintain any value in the $Cdn. 30 years from now we will use $US with the Canadian dollar for getting a pop at 7 Eleven. Sort of like the mexican peso. All serious business in Mex is done in $US. The two interest rate cuts in 2015 were largely about translating $35 oil into $50 worth of cash flow so the oil companies did not lay there entire staff off. That is coming in 16 as the hedges run out. It also helped the farmers because we bought inputs with 0.80 cent dollars and sold grain at 0.72. The sole reason many fields that otherwise would have lost money actually were in the black.

[cottonpicken]

The fx trade is based on government fiscal/current account/balance of trade and whether or not they are running surplus our deficit.

Lots of people myself included thought Canada would go positive during the boom but we never did. So now with the impending crisis the periphery nations suffer while anything in the IMF's special drawing rights basket seems less vulnerable

Kind of scared what this means for us in the future. Credible rumours are saying bad things.

[Hopalong]

So is the answer to economic problems to limit or decrease our productivity as advocated by some on this discussion forum?
We would have less to trade.

[oneoff]

What is the sense of producing goods at a loss

And until contracting bullshit is seen for what it is; there is darn little to be optimistic about when commodities are all at depressed prices....while inputs by and large maintain prices because the Canadian dollar is so weak.

Steal the forex on the product side and keep prices basically constant on the inputs and necessities (and luxury item too). Good plan for manufacturers and governments too. But not good enough to avoid deficits it seems.

[TOM4CWB]

This on DTN posted by Cliff Jamieson Canadian Grains Analyst Dec 31/15:

"Lower crude means a lower Canadian dollar, which is supportive for Canadian grain basis levels. Over the past year, the Canadian dollar has fallen approximately 15.9% since the Dec. 31 close at $.8597 CAD/USD. Well-known economist David Rosenberg suggests that while there used to be an 80% correlation between the Canadian dollar and crude oil, this correlation is now at 94%. Where the loonie is going may depend on your outlook for crude, with some economists suggesting that the Canadian dollar is currently bottoming while others are suggesting a further potential move to $.68 CAD/USD. Previous work in this space has pointed to range of potential support ranging from $.7030 to $.7135 CAD/USD, as seen on the continuous monthly chart."