Back on Sept. 17 I suggested a contrarian trade was to be long Canadian dollars vs. the US dollar. I suggested it was an idea that seemed so wrong that it might work. I went further and discussed the idea in the Q4/2016 Newsletter.
Over that period of time the Loonie has lost about 6% versus the dollar but looks to have bottomed.
However, the Canadian Dollar index has been almost flat over that period of time.
However, the USD has been rallying strongly.
But so has the Loonie, but just not against the dollar…yet.
Since the potential OPEC deal the Loonie has been very strong against the Aussie Dollar, another commodity currency.
If Donald Trump does name Rex Tillerson as his Secretary of State, trade with Canada will not be affected. ExxonMobil owns over half the shares of Imperial Oil which owns 25% of Syncrude, an oil sands producer, in addition to the oil sands project, Kearl Lake, that Exxon owns jointly with Imperial.
As soon as the US Dollar takes a breather this contrarian trade will likely work. In fact Loonie outperformance may have started in late November.