Currency Analyst since 2010

Reasons behind weaker CAD

CAD has been doing awful versus the greenback this year. Canadian economy isn't doing very well, and the Bank of Canada is putting pressure on the national currency to see the economy improve.

During the years after financial crisis Canada benefited from high commodities prices and consistent growth. As a result, the cheap cash unleashed by the Fed’s loose monetary policy poored to Canada. Now there's an opposite situation: the money is flowing in the other direction as US economic recovery has picked up and the Fed’s tapering stimulus. In addition, the economic growth in China slows down and this has a negative impact on commodity prices and, consequently, on Canada.

 At some point US recovery and weaker loonie will help Canadian economy. However, most analysts agree that CAD still hasn’t fallen enough for the positive effects to appear.

Source: Wall Street Journal

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