The Canadian dollar is holding in relatively well given the fundamentals that continue to weigh. From weak employment numbers to interest rates to the continuing softness in oil prices, all these factors will continue to weigh heavily on the loonie.
In the year and a half since the oil shock hit Canada’s resource based economy, the dollar has fallen from a lofty perch of about 95 cents,to today’s current level of about 76 cents, after dropping to 68 cents earlier this spring.
Canadian exports still weak
One noticeable bounce that has not occurred is a move up in Canada’s exports, a situation that was forecast to unfold as the dollar weakened. Canada’s trade deficit hit a record high last month, as a struggling US economy is giving Americans little reason to buy Canadian imports.
As noted analyst David Rosenberg said this morning, “It should be ringing alarm bells that, as competitive as the Canadian dollar has become, it simply may not be competitive enough.”
With that said, don’t be surprised if the Bank of Canada steps back into the mix and lowers our interest rates later this year or early next, putting continued downward pressure on the dollar in order to jump start exports.