Oil is 17% from its lows, but Canadian dollar remains just 1 cent from cycle high
How a market reacts to good news is the best indicator of the underlying trend.
Someone told me last Friday that oil would rally 17%, I'd expect a significant bounce in the Canadian dollar but it hasn't happened. USD/CAD is actually higher than it was a week ago -- by about 60 pips. A large part of that owes to the incredible surge in volatility over that period but it's still a great disappointment for CAD bulls.
The lack of enthusiasm is especially evident over the past hour as WTI crude surged to $45.04 from $41.78 -- that's a 7.7% gain. Yet the most USD/CAD fell was 81 pips.
Perhaps as some of the emotion exits the market, the loonie will be able to re-establish itself but right now it looks as if new highs in USD/CAD are only a matter of time.
The trend in USD/CAD is unblemished despite the surge in oil prices.
