Norway and Canada economic Surprise
Norway and Canada are the two countries whose economies are heavily dependent on oil that we track and trade. The effect of oil is pronounced on these two currencies and as it has been very volatile in recent months it has led to some really good trades, we were long USDNOK and USDCAD for most of the second half of 2018 and made some excellent money as a result.
The weekly oil chart is shown below (WTI)
The price of oil has been in a significant down trend since 2008, it made a high in one of our turning areas and turned lower mid 2018 (we didnt trade it sadly) and looks like it might have started the next leg lower. It is our view that the price of oil is heading towards zero in coming decades, the world is moving away from oil at a rate that seems to grow exponentially and is likely to destroy the price of oil when electric cars become the norm. So we are only really interested in selling oil but it is so volatlie we are likely to stay on the sidelines. Of course those countries whose economies are dependent on oil will have a tough time dealing with this going forward. We prefer to trade the currencies affected by oil rather than oil at the moment, second dimension trading as it is often called.
Canada Surprise Index
The canadian surprise index has turned lower during 2018, as might have been expected. With no immediate sign of a reprieve we continue to look for opportunities to sell the CAD. If you look at our previous post on the Australian surprise index you will see a good potenital trading area. The USDCAD cghart below shows our 2018 trade and the pattern we are looking to trade again although we have no entry point at present we will be looking to buy.
Norway surprise index
Norway has performed really well considering the movements of oil and the troubles the Euro economy seems to be finding itself in. If Norway can continue in this trend it might be able to escape the effects of oil meaning we probably will not be able to trade it in the near future. Of course these things change quickly and if the surprise index truns lower again we will look to trade the currency, our trade from last year was closed early and missed its final target
The economic surprise index
Follw the link to read more about the surprise index methodolgy