What I'm most surprised with is that Oil is up 50% ($45 to $68) in the past 2.75 years, yet the Canadian Dollar is flat at $0.67.
I let this slip for a little bit.......shrugging off the incorrect currency valuation as simple transposition.
1 CAD is currently .76 USD.
But as this post got quoted, it got me thinking. I did what I do and pulled the research.
So. Peak value for our currency (in the last decade) was $1.04 USD.
At that time the value of WTI (our oil) was $160.00 per barrel.
The value of our oil bottomed out at $30USD
A decrease of more than 80%
During this decline, the Canadian dollar went to a low of .69USD in almost perfect synch.
That's a decline of 39%
So, almost perfectly 1/2 the rate of decline of oil.
That establishes our current co-relation rate (whether that rate makes any sense is a completely different discussion)
If one then examines the gains in oil the increase is roughly 130% from trough to current peak. (put another way, it reverses out 27.5% of the decline)
The currency, in the same period is .69c to .76c up slightly more than 10%.
Not flat, though certainly tracking below expectations at first blush.
So I went and looked to see the last time the dollar was trading in this range.
As it occurred to me that the previous peak was in part feverish speculation with talk of $200 oil.
The dollar was last at .77c USD in March 2009.
At which time oil was $58.82 per barrel.
This suggests less of a lag, but still a lag.
Now, of course, that excludes all other factors.
All other things being equal, national interest rates have a substantial factor on currency value.
The US Fed has upped rates more aggressively than Canada's central bank creating a differential of 0.5% which on a base of 1.5% (vs 2%) is not immaterial.
That could easily account for some suppression of value.
But here's one more thought on this.........
Natwest Markets has exchange forecasts posted online. They project by 2020 (less than 2yrs away) a rate of just over .83c CAD , that would be highly correlative, if you assume oil trades in the current range.