Energy and currencies: what's the link doing right now?
Energy prices feed inflation, trade balances and the oil currencies all at once. When oil moves, the effects ripple outward in ways worth tracking together.
What are you seeing?
- how current oil prices are hitting inflation expectations
- the CAD and NOK reaction you've observed
- the importer currencies feeling the pressure
Background: oil and the Canadian dollar and Brent above $100.
Background: Oil and currencies: why crude prices move the Canadian dollar
Crude oil links energy markets to currencies through trade, inflation and interest rates. How that works for the Canadian dollar, and why the link isn't fixed.
Why does oil affect the Canadian dollar?
Crude oil is one of Canada's largest exports. Higher prices increase export earnings and demand for Canadian dollars, and they also affect inflation and interest rate expectations.
Does USD/CAD go down when oil goes up?
Often, because a stronger Canadian dollar pushes USD/CAD lower. But the relationship isn't fixed: interest rates, trade relations and risk sentiment can outweigh oil.
Comments
Log in to join the discussion. Comments follow the community guidelines.
Log in to commentLoading comments…