Canadian Dollar Ditched as Petrocurrency as Oil Support Fades

The Canadian Dollar's relationship with oil prices has weakened significantly over the past decade, making it no longer a reliable currency to hold when oil prices rise.

According to MRB Partners, the CAD's historical sensitivity to crude oil prices has 'diminished materially', leaving domestic housing, credit, and growth risks as more influential factors in its value.

USD/CAD was trading at around 1.4036 on Thursday after rising 0.18%, despite oil prices staying elevated. The pair fell 1.36% in July but has remained above 1.40.

The firm's analysis suggests that earlier policy measures prevented a sudden housing crisis rather than removing the underlying imbalance, leaving the Bank of Canada with less freedom to raise interest rates compared to the Federal Reserve.