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Why Does the Canadian Dollar Dip When Oil Dips?

 
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Why Does the Canadian Dollar Dip When Oil Dips? Can't Post
Why does the Canadian dollar decline when oil declines? Frankly, with dropping oil prices there is less demand for Canadian dollars (investors in oil, etc.,) and therefore the CDN dollar will depreciate. Conversely in the US, a rising dollar typically pushes oil prices lower as investors who buy crude and other commodities as hedges against inflation start dumping their positions to cut their losses. A stronger US dollar also makes dollar-denominated commodities more expensive to overseas buyers, further eroding demand.

econmod
Broker / Moderator

Aug 16, 2008, 1:43 PM

Post #1 of 3 (2752 views)

Re: [econmod] Why Does the Canadian Dollar Dip When Oil Dips? [In reply to] Can't Post
Do you mean that the CDN dips versus the USD?

If so, maybe you're over thinking it. Maybe the strengthening of the USD has greater downward pressure on the CDN than oil prices have upward pressure.

I haven't really tried to work this out fully, though.
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Jdvn1
Banker

Aug 21, 2008, 11:05 AM

Post #2 of 3 (2662 views)

Re: [Jdvn1] Why Does the Canadian Dollar Dip When Oil Dips? [In reply to] Can't Post
I meant against the USD yes. My description holds true, however, of course FOREX is not a closed system and there would be a relation you've mentioned. It would be very interesting to graph this. It may have been done I"ll check (and if I recall oil had a greater impact....)

econmod
Broker / Moderator

Aug 26, 2008, 11:10 AM

Post #3 of 3 (2574 views)

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