These past weeks, USD/CAD returns have followed the oil price movements which were mostly negative as risk-aversion surged. As shown below, when the WTI prices fall, the USD/CAD strengthens to reflect less demand for the Loonie.
The increased share attributed to oil in the BoC’s commodity index shows the important role played by the black gold for Canadian exports and the CAD.
Based on our statistical forecast of the WTI with T=20 days, oil prices should reach $87.65 per barrel in the mentioned time frame. Statistical projections for the USD/CAD suggest the currency pair could be moving from 1.0271 to 1.00521.
Statistical data points towards a bearish outlook for the USD/CAD.