Most people wil accept that moves in CAD & oil are well correlated. Over the past year, the R2 is 0.82. Simplistically, USDCAD would appear to be too high by around about a big figure given where the front-month Brent is trading – see chart of USDCAD and the inverted future.
However, correlations do break down and moves in USDCAD and oil have not marched fully in step for a few sessions now. Turnover is good in USDCAD and we have seen strong net buying (57%) over the course of the day, suggesting that many do not feel that this move is over. USDCAD is now 1.2619.