Loonie Ignores Oil Price Surge: A Breakdown of Canada's Currency Puzzle

The Canadian dollar has historically moved in sync with oil prices due to Canada's reliance on energy exports. However, this relationship has broken down recently, and the current surge in oil prices driven by the U.S., Iran conflict has not provided any support to the loonie.

Historically, the Canadian dollar closely correlated with Brent crude, rising and falling alongside it. Since the pandemic, there have been two major oil price spikes, one in March and another in April of 2020, but neither had a significant impact on the loonie.

The current disconnect between the currency and crude has reached a historic high, with oil prices reaching $70 per barrel, but the Canadian dollar remaining steady. Trump's tariffs have been cited as a reason for the decline in the loonie, but this is not the case.