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Canadian Dollar Having Its Best Start In Four Decades



The Canadian dollar is having its strongest start from the year till date, since it became a floating currency in 1970. The Canadian dollar is up 3 percent against the U.S. dollar so far this year, due in part to a dip in the American currency. Analysts are reviewing the realistic growth trajectory of the US after Donald Trump becomes president. Trump had declared on Tuesday that the dollar was “too strong”, prompting a one percent rise in the loonie. It is up to 76.66 US cents, which is an almost three month high. The second best year-to-date start for the first 17 days was in 2003, when it was up by 2.4 percent.

The returns are beating analyst expectations, who forecasted a dip for the Canadian dollar to 73.52 US cents by the end of the year. The Canadian Imperial Bank of Commerce had projected/hoped the loonie would go down to 72.99 US cents. The loonie has responded to growing sentiments that global manufacturing is on the way up. The concern for Canada is the increased rate could hurt its trade. The country had its first month of trade surplus in two years in November. Economic conditions were further boosted by the 53,700 jobs added in December, despite a predicted decline by most economists. The country still has much fluctuation to expect, depending on whatever surprises Donald Trump poses, according to Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank. “The market has been pricing in mostly the good stuff from Trump and largely ignoring the negatives,” McCormick said. “Trump’s policies will be more inflationary than growth-supportive and Canada continues to lag the U.S. on the closure of the output gap, leading to a wider rate gap and stronger U.S. dollar.”

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