Short-squeeze in oil prompts low volume loonie bid

On the ramp in crude since March, the Canadian dollar (FXC) has bounced nearly 5 cents against the greenback. But as highlighted (in red boxes) below, we have seen other 5-6 cent rallies in the past 3 years which proved just a short term bid amid the sustained weakness of a secular downturn in commodities.
As always we must monitor longer term trends carefully for signs of a turn, but with this month’s short-covering squeeze in crude likely to drown in still mounting supply, the loonie may not be breaking out in a meaningful way anytime soon.