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With Justin Trudeau, Rachel Notley, and Kathleen Wynne in charge of Canada’s economy, the trio have made bad economy decisions over and over, among other things, Canada is hurting and already past the first stage of poverty.
One of the justifications provided by the government for the increasingly poor Canadian economy was the fall in global oil prices. Oil being one of Canada’s major exports, it would be natural to assume that a dip in the global oil prices would have a corresponding impact on the Canadian economy. The inverse of that assumption would be that if the oil prices rise again, it would give a boost to the Canadian economy.That, however, has not happened.
Compared to the US economy, the recovery process for the Canadian economy has been disappointingly slow. This is evident from the fact that even though there has been a recent rise in the price of crude oil in the international market, the currency of Canada has failed to climb correspondingly.
One of the potential causes of the loonie’s disappointing performance is the recent jobs figures released by Statistics Canada which showed that Canada had lost around 31,000 jobs in a single month. It can be speculated that the job data is driving the price of the loonie instead of the oil prices.
Drop in correlation
The difference between the rise in oil prices and the loonie’s value has been staggering this month. Whereas the oil prices went up 8 percent, the loonie only managed to climb 0.5 percent. This means that the correlation between Canadian dollar and the crude price reached an 18-month low.
The drop in the correlation may also indicate that other factors are driving the Canadian’s dollar’s performance, according to Bipan Rai, a strategist at the Canadian Imperial Bank of Commerce. “The market’s finally turning its attention away from that tiring story line, and other drivers of the Canadian dollar are stepping into the spotlight,” says Bipan, who expects the loonie to weaken even further this year.