You Know it's Bad When the Canadians Are Kicking Our Asses
No offense to my dear friends from the Great White North, you know who you are. Hey Krupo, just checking but I can still sleep on your couch, right? Me and my gold bars might need a spot to, uh, hide if this keeps up.
As many Canadians spent Monday recovering from feasts of turkey, the loonie lifted a new high for the year against the American dollar, reaching nearly U.S. 97¢.Ouch. Bad news for the greenback, good news for those clever Canadians. Do you see a pattern here yet, kids? Everyone else seems to be doing better and we're still sucking hard. This might be a problem.
Although trade in global currency markets was lacklustre with holidays in Canada, the United States and Japan, the Canadian dollar continued to get a boost from strong demand for oil and other commodities, as well as Canada's relatively robust economy compared to its still-ailing neighbour to the south.
As long as U.S. policymakers keep interest rates near zero, the Canadian dollar and many other currencies such as the euro are likely to keep on their upward trajectory, with the loonie possibly reaching parity with its U.S. counterpart by the end of the year, currency analysts said.
"The rebound in commodity prices in general has been really helpful to the Canadian dollar," said Andrew Wilkinson, senior analyst at Interactive Brokers Group in Greenwich, Connecticut. "It's also benefited from U.S. dollar weakness based on the fact that U.S. policymakers have rolled out a red carpet of easy money as far as the eye can see."
With benchmark interest rates at close to zero in the United States, investors have turned to currencies in countries with stronger yields, including Canada which is only marginally better.