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The loonie's getting smacked around again Friday, so it's time to check emerging market equity indices and domestic materials stocks – two benchmarks that have given hints as to the direction of the currency previously – for hints as to where things might settle out. Examined against the U.S. dollar, the Canadian dollar has shed almost five per cent in 2013.

Our two charts highlight the loonie's long term dependence on the economic development of the emerging markets and the resulting increase in global demand for resources.

The first chart compares the MSCI Emerging Markets benchmark against the Canadian dollar to U.S. dollar cross rate. The correlation is insanely high at 0.95 (weekly data, last 10 years). Generally the domestic currency looks fairly valued in general terms, neither overbought or oversold relative to emerging markets equities.

The second chart plots the loonie against the energy-heavy S&P/GSCI Commodity Index. The correlation is also high at 0.92, but the forward implications of the current situation are tougher to read.

I was hoping for a big divergence in one of these charts that would indicate the short-term direction of the Canadian dollar but, well, the best laid plans and all that….

It remains important for Canadian investors, particularly those with business interests sensitive to currency fluctuations, to pay careful attention to emerging markets asset performance and commodity prices. Until the trend breaks, a deteriorating outlook for emerging markets growth, as we've seen with China, is a precursor of weakness in the domestic currency.

Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights , and follow Scott on Twitter at @SBarlow_ROB .

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