The Canadian dollar hit a three-year low against the US dollar today, thanks in large part to signs of economic recovery in the United States and the continued divergence of monetary policies between the United States and Canada.
Canada’s economy appears to be stalling right now. Even as economic data shows that things are picking up in the United States and even the United Kingdom, Canada is being left behind — along with the eurozone.
As a result of Canada’s stalling economy, the loonie is losing ground against many of its major counterparts. Indeed, the loonie hit a three-year low against the greenback on the monetary policy divergence that is emerging.
The lower loonie could eventually be good for Canada, making Canadian goods cheaper and boosting demand. It might also mean that more Canadians eschew cross-border shopping trips. That would help the economy regain its solid footing. And, since the loonie seems to be falling now without much help from policymakers, the Bank of Canada may not need to do much in terms of interest rate policy in order to precipitate the loonie’s weakness.
At 14:49 GMT USD/CAD is up to 1.0854 from the open at 1.0804. EUR/CAD is up to 1.4741 from the open at 1.4674. GBP/CAD is up to 1.7878 from the open at 1.7776.
If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.