Some well-known, heavily traded developed market currencies are highly levered to fluctuations in commodities prices. That list includes the Canadian dollar, which was punished by tumbling oil prices in each of the past two years.

With oil rebounding this year, so is the Canadian dollar, also known as the loonie, and that is good news for the CurrencyShares Canadian Dollar Trust (NYSE: FXC). FXC, which tracks the movements of the loonie against the U.S. dollar, is up more than 4% over the past month and nearly 9% year-to-date.

Canada enjoys large natural resource reserves. As we have witnessed, Canada’s oil production could either lift or weigh on the economy, depending on the energy market. Additionally, as we hear more about droughts and dry weather conditions, Canada’s freshwater reserves, which account for 20% of the world’s freshwater, could come into play.

Some observers have warned of a bubbling real estate sector, and traders have bet against Canadian real estate through shorting Canadian banks. In the meantime, the national median home price continues to climb to all-time highs. We will have to monitor how the government plans to engineer a soft landing for the real estate market in an attempt to mitigate a potential fallout.

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The recent rise in crude prices has been correlated with a rise in the Canadian Dollar. The most recent meeting on April 13 of the Bank of Canada culminated with the Bank of Canada leaving rates unchanged at 0.5%. The Bank of Canada revised upward their estimate for first quarter growth in Canadian GDP to 2.8%.

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