Late Reflation Is Here — Energy Is Taking Control

We have to start with the regime.

We are not in a deflation scare.
We are not in a risk-off unwind.
We are not in a bond-led slowdown.

We are in a reflationary environment — and more importantly, we are late enough in that regime to see leadership shift.

Early reflation is about precious metals.
Mid-cycle reflation is about base metals.
Late reflation? That’s when energy starts to move.

And energy doesn’t move quietly.

The Currency Tell: The Canadian Dollar
The currencies speak first.

The Canadian dollar — one of the purest proxies for oil in the developed world — has been dead money for years. Just like crude. Just like Canadian energy equities.

 

But that regime is changing.

Look at the chart:

A long period of structural underperformance.

A grinding bottom.

Now a series of higher lows.

Momentum turning.

Structure improving.

This is not what breakdowns look like.

This is what basing processes look like.

When oil collapses, the Canadian dollar collapses.
When oil trends higher structurally, the Canadian dollar begins to trend with it.

Currencies don’t bottom because of hope.
They bottom because capital flows shift.

If the Canadian dollar is bottoming while energy equities are breaking out — that’s not random. That’s regime alignment.