When it comes to the relationship between the Canadian dollar and commodity prices, the headline benchmark prices can be misleading. Chart 1 displays the relationship between the Canadian dollar and the price of Western Canada Select (WCS) crude oil. As Canada’s most high profile export, it is a key driver of U.S.-Canada terms of trade. The Bank of Canada pays close attention to the value of domestic crude prices. In its most recent Monetary Policy Report the BoC singled out the record discount of WSC to global benchmarks like WTI in Cushing (a result of persistent transportation bottlenecks) as putting pressure on “Canada’s terms of trade and real gross domestic income” (Chart 2).