While petroleum prices have seen significant upward movement in the past few months, an observer argued that oil is still quite a long way from becoming a positive influence on the flagging Canadian economy.
“Oil is trading in a dead spot for the Canadian dollar; it’s neither good nor bad,” Bank of Nova Scotia (Toronto) chief foreign-exchange strategist Shaun Osborne told Bloomberg News.
“Oil would have to move above $50 per barrel or higher to make a change for the loonie,” Osborne said.
Despite an 8 per cent upward spike in oil prices this month, the Canadian dollar went up by a miniscule 0.5 per cent—far behind fellow commodity currencies Norwegian krone and Mexican peso, Bloomberg reported.
Hurting matters is the 1.5 per cent shrinkage in the Canadian economy in Q2 2016, which accompanied an 18-month low in the 4-week correlation between the loonie and crude oil last week.
Analysts with the Macdonald-Laurier Institute have previously noted that the Canadian oil and gas sector is the key to unlocking the country’s next big economic asset that can stand side-by-side with the vibrant real estate market.
“Getting the world price for Canadian oil exports would result in more jobs and money for Canadians without having to produce a single extra barrel. This can translate into more investment, higher government revenues, and a significant boost to the Canadian economy totalling as much as $50 million per day, according to one estimate from the Canadian Chamber of Commerce,” the Institute said.