Crude oil has already bounced back by 30 percent over the past month. But according to Richard Ross of Evercore ISI, currency market moves are predicting more upside for the battered commodity.
Over the past week, oil-exposed currencies such as the Canadian dollar, the Norwegian krone and the Australian dollar have surged in value against the U.S. dollar. And since these currencies tend to be correlated with crude, Ross extrapolates that oil has more upside.
Crude-exposed currencies "are really firming here, and they have been firming over the past month or so along with crude oil itself, and I think that holds bullish implications," Ross said.
Looking at the Canadian currency in particular, Ross predicts that "the Canadian dollar continues to firm against the U.S. dollar, and this should be supportive of crude."