Oil (crude oil) has always been called as black gold, probably due to its scaricity on earth. It is so extensively used that there are overwhelmingly convincing predictions about it ceasing to be a commonly used commercial resource.
As the oil available on earth continues to dry, its price keeps on soaring high! But what makes us call it ‘Black Crack’ instead?
Well… Oil is so deeply entrenched, running as a major energy source in our global economies veins, that just like a crack addict can live without gold but not without crack, the global economy ceases to function as before without oil.
Canada, one of the largest global oil exporters and most importantly the largest exporter to USA supplies 3 million barrels of oil and petroleum products to America per day!
This makes Canada, USA’s biggest black crack dealer!
It’s on America to make sure that all the purchases are bought in Canadian Dollars(CAD), hence driving the demand for CAD higher!
As a Forex player, this makes us notice the declining USD/CAD.
Canada is heavily dependent on exports! With almost 85% of its exports going to its big brother(USA).
An increasing demand of Oil in America leads to an increasing demand in Canadian dollars and results in a decreasing USD/CAD ratio.
If US demand falls, it hurts the demand for CAD and leads to increase in USD/CAD ratio!
Oil has had a negative correlation with USD/CAD since 2K to 2K16. Hence, crude oil gains value with CAD while the US Dollar falls and vice versa.
Similar observations can be made between certain specific commodity-driven countries currency pair relations…(like AUD/NZD and precious metals/crude oil)etc.
Lastly, the most important ingredient to reap benefit from these observations is timing.
So next time you go out to re-fill your ride(in USA or Canada) and observe a rising oil price….its time to short USD/CAD!
Have a cracking New Year all my dear friends at ‘shortville’! 😉
#Investing #Forex #Trading #Short #Facts #Commodities #Currencies #WednesdayWisdom #Oil #Canada #USA
Monk Post ! 
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