The Canadian Dollar, or Loonie, recently cleared a 47-year
high against the US Dollar. Its next
major milestone is crossing a level last seen in the late 19th century!
There are a few reasons for the Loonie鈥檚
continued strength, namely interest rate parity and economic strength. As a result of the Fed cutting rates for the
second time in as many months, the Canadian benchmark interest rate is now
equal to the American federal funds rate, both at 4.5%. In addition, record-breaking oil and commodity
prices will ensure that Canada鈥檚
economy will expand further, perhaps as the same pace as its currency. Reuters reports:
If the U.S. Central bank signals another rate cut in December, or if it goes against
expectations and chops rates by 50 basis points, it could pull the rug out from
under an already unsteady U.S. dollar and clear the way for the Canadian
currency to shoot higher.
Read More: Loonie eyes 130-year high if Fed makes big rate
cut
0 comments
Post a Comment