Canada is a textbook example of a resource-reliant developed economy. Around 10% of its nominal GDP is tied to the oil and gas sector, and oil is still the country’s top export.
But the Canadian economy is looking vulnerable:
Unemployment has been rising steadily, with the latest data showing the labour market cooling more than expected.
GDP growth is stagnating.
The Bank of Canada remains cautious, and markets have increasingly priced in rate cuts in early 2026.
If oil weakens further, the Canadian economy has fewer cushions to absorb the shock.
This makes CAD more susceptible to downside moves, especially against currencies that benefit from lower energy prices or risk-off environments (e.g., JPY or USD).
Norway: Oil Exposure Without the Cushion
Norway, while boasting one of the largest sovereign wealth funds in the world, still has a currency that is highly sensitive to oil fluctuations.
Here's why:
The NOK is tightly correlated with Brent crude, Norway’s key export.
Recent weakness in oil prices (due to OPEC+ production increases and global demand concerns) has already started dragging the NOK lower.
While the Norges Bank has hiked aggressively, inflation is falling, and policy tightening may be near its peak.
Unlike the USD or EUR, which benefit from broader macro drivers, NOK’s strength tends to rise and fall with crude.
How I’m Approaching It
Right now, I’m keeping an eye on:
CADJPY for potential breakdowns if oil continues to decline and risk sentiment turns.
The price is currently testing the weekly highs of 108.75. A hold here could lead to further declines towards the trendline support.
EURNOK could be one to watch once the ECB data picks up again.
The price here is breaking above the 50 day moving average and previous swing highs. A rally could form here towards the range highs of 12.0000.
For us using the oil market we can find opportunities using key market correlations.