It seems that the CAD will continue to strengthen over then coming days and weeks but in order to answer your question fully I will outline the reasons why I believe this is.
Firstly starting with oil prices, the number of active oil and gas rigs had fallen again last week, keeping the overall rig count well below year ago levels for the 4th week in a row. The number of oil rigs fell by 2 to 805, this is a 39 rig decrease YoY and on top of that US crude production fell slightly for the week ending May 3rd at 12.2 million barrels, the all time high was the week before at 12.3 million barrels.
Canada’s rig count increased by 2 but year on year they are down by 10. This shows a slowing supply for oil which is always a benefit to Canada’s economy. If there is an increase in tensions with Iran and they target oil infrastructure in the middle east then we will definitely see oil prices shoot up and that will mean a higher Canadian dollar.
Elsewhere for Canada there was a record jobs gain on Friday along with a pick up in wages. The jobless rate dropped also.This confirms the BoC’s view that the slowdown was temporary and it has economists speculating that the CAD is very undervalued.
Finally we should see a further pick up in the Canadian economy going into the summer months which means we should definitely see an increase in the CAD’s value over the next few weeks.