Canadian Dollar Strengthens as Crude Oil Prices Rise Higher

Canadian Dollar Strengthens as Crude Oil Prices Rise Higher

Posted Tuesday, May 5, 2020 by
Arslan Butt • 1 min read

The Canadian dollar continues to strengthen against the US dollar, boosted by a rise in crude oil prices over the past few sessions, even as the risk-on sentiment spurs movement away from safe haven instruments. At the time of writing, USD/CAD is trading at around 1.406.

The US dollar has seen its safe haven appeal weaken slightly in recent days over emerging reports about countries across Europe and Asia looking to resume economic activity over the coming weeks. Even in the US, some states have signaled their interest in restarting at least some level of economic activity.

This has helped support the rise in crude oil prices as traders anticipate an uptick in oil demand as factories and workplaces reopen. The Canadian dollar is closely correlated with crude oil prices as oil is one of Canada’s key exports and a major contributor to its economy.

The Commodity currency received an additional boost after Quebec started reopening its economy after being one of the worst affected regions in the country. The CAD is also supported by reassurances from the BOC, which has committed to adjusting its asset purchase program to support economic recovery in Canada in the aftermath of the pandemic.

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