The Canadian dollar is enjoying an
imperious run of form of late. Between 1 May 2017 and 7 August 2017, theCAD/USD has appreciated by 7.8923% – a remarkable achievement. The loonie
(CAD) has rebounded sharply in recent months, owing to the improved performance
of the Canadian economy. The S&P/TSX compositeindex is currently down 0.59% for the year to date, with a 52-week trading
range of 14,319.11 on the low end, and 15,943.09 on the high-end.
However, over the past 1 month the index
has moved from 15,105.29 (July 10, 2017) to its current level of 15,197.84
(August 10, 2017). The slight appreciation is reflective of current trends in
the Canadian economy. Consider that the 1-year return of the S&P/TSX
composite index is 5.93%, spurred in large part by the uptick in commodityprices like crude oil, gold, natural gas, coal, and the like.
Canada is a commodity-rich country, with
some of the largest crude oil deposits in the world. Currently, Brent crude oil
is trading at $53.24 per barrel, and WTI crude oil is inching closer to the $50
per barrel level at $49.85. As oil prices rise, the Canadian economy
strengthens. As Canada’s chief export, crude oil has a large part to play in
the performance of the CAD. Rising prices boost the value of oil companies on
the S&P/TSX composite index. This in turn raises confidence in the Canadian
economy.