Canadian Dollar Continues Rise on Positive Economic Forecasts
The loonie posted gains for 5 weeks in a row, on speculations that the global financial turmoil is easing, pushing commodity prices up.
Canada’s currency has been a fantastic investment since the beginning of March, against its U.S. counterpart, having the biggest rally since November 2007 gaining more than 2 percent during the past week. This month has been an optimistic one if compared with the previous ones marked by extremely downturns in trading markets, and the Canadian dollar, being a high-yielding currency driven by risk appetite and commodity prices, had the opportunity to post solid gains after several months of significant losses.
Being one of the most correlated currencies with the equity markets, analysts expect that as long as stocks continue to recover from last year’s losses, the Canadian dollar is expected to strengthen, also pushed by commodity prices. Even if the current moment is extremely positive for the loonie, uncertainty still remains among economists, which avoid to confirm that the Canadian dollar is a good bet for the long term, claiming that days of growing risk appetite may move or not the global markets for the next weeks.
The USD/CAD closed this week at 1.1856 from 1.1930 in the intraday comparison. The CAD/JPY rose from 82.50 to 83.56.
If you have any questions, comments or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.
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Earlier News About the Canadian Dollar:
- Unexpected Drop in Inflation Rate Pushes Canadian Dollar Down (2009-04-18)
- Canadian Dollar Rises as Oil Shows Strength (2009-01-05)
- Canadian Dollar Declines for Fourth Day (2008-12-23)
- Canadian Dollar Slid This Week as Oil Declined (2008-11-22)
- CAD Weakest since March 2007 on Oil Slump (2008-10-10)
3 Comments
The way things are going the CAN $ will be at parity with the greenback by the end of this month, with over 30 000 new jobs being created in sept. it can only increase the value of the loonie and push it to over .96 by the end of today, oct.09/09, it would be a wise investment to hold off until Nov and then change any available canadian funds into US$ b/c as 2007 showed us this parity will only be temporary and then in 2010 cash in on a possible 15-25% gain
It’s a probable scenario but it doesn’t take into account the fact that Canada is an exporting country and as every exporting country it wants its currency to be undervalued compared to the currencies of the major trading partners. So, the interventions or some other measures may interfere here with the natural course of the things.
Very true Andrei but as an investor one must make the best of a situation like this, it was a wise investment in late 2007, I made over a 20% profit in a year on a substantial investment, and funny enough it was this exact same time of year that the CAN dollar went above parity (Nov.2007) and dropped below .80 almost a year later (late Oct.2008) watch and see b/c it will prove to be a wise investment for 2010, the US$ will bounce back in a big way by late 2010 and/or into early 2011.