Bank of Canada and Outlook for Canadian Dollar
September 28, 2009
I was on the Business News Network today talking about my outlook for the Canadian dollar and how I think it could be headed to 1.10. Here are some of my recent CAD comments about whether the BoC is worried. Click on the image to access the video:
Canada – Bank of Canada
The Bank of Canada on the other hand is growing increasingly uncomfortable with the strength of their currency. In July, the Canadian dollar skyrocketed because of the central bank’s unusual optimism, but earlier this month, the BoC toned things down significantly. At the time, they said as long as inflation does not skyrocket, interest rates will remain unchanged until the second quarter of 2010. However last week, the BoC took things one step further. Canadian Finance Minister Jim Flaherty proposed an expansion of mortgage buy-backs to C$125 Billion or $116.4 Billion, which represents a return to easier monetary policy. The proposal comes on the midst of comment by Governor Mark Carney who claims the recovery is not “self-sustainable” and is a mere consequence of unconventional measures. On Friday,
Carney also said he would provide more stimulus if needed while Deputy Governor Longworth said the currency Is a risk to economic recovery. Although we do not expect intervention from the Bank of Canada, if the Canadian dollar continues to rise, the BoC could grow more dovish.
Posted in 2009 canadian dollar
content rss
September 29th, 2009 at 4:06 pm
How about the yen? What do you make of sub-90 USDJPY? In the old days the BOJ would’ve intervened well before this point but it seems the current administration has realized the futility of trying to compete w/Bernanke’s printing press. Strangely enough, the Nikkei hasn’t really suffered all that much as one would’ve expected.
September 30th, 2009 at 10:27 am
Yen is tricky to trade. Yen no longer serve as a carry trade currency. Now I rather trade USD crosses: sell USD and buy the majors.
October 4th, 2009 at 11:07 am
I am holding a bearish view on US Dollar. I had placed a working order to buy AUDUSD at 0.8600.
October 12th, 2009 at 1:55 pm
I believe that the Canadian dollar will be the next carry trade since while the rest of the world begin to increase their interest rates, I believe that Canada would do well by keeping the overnight interest rate at 0.25% so that the dollar can weaken against all majors. In this way, the manufacturing sector can thrive on exports, thereby reducing unemployment and encouraging tourism in Canada.
December 2nd, 2009 at 2:38 am
I read alot about the future and the past on the Canadian dollar.
I think it fluctuates too much, so investors can profit too much.
What do you think?
For me I do alot of buying and made money in the past, and now
that I need it it is too high. Too bad for me.