USD/CAD: Oil prices losing impact on Loonie - CIBC

Analysts at CIBC expect a rebound near term in the Canadian dollar on the back of news elsewhere in the economy, rather than oil prices. 

Key Quotes: 

“Forecasting movements in the Canadian dollar used to be easy. Well, if you knew what oil prices were going to do anyway. However, that relationship between oil prices and the loonie has weakened in recent years, with a $10/bbl move today having less than half the impact on the currency that it had in the recent past. That’s because, with oil prices within a broad range between $45-$70/bbl there seems to be little macro impact for the Canadian economy. Prices are not weak enough to really weigh on growth and require BoC easing, but not strong enough to bring back investment in the oil sector – particularly given pipeline constraints. “

“We’re expecting better news elsewhere in the economy, rather than oil prices, to drive a partial near-term rebound in the C$.”