CAD being attacked on two fronts
Having fallen well below parity all together with the USD, the Canadian dollar is now being attacked on two fronts. First, there is the deteriorating economic situation. Prices for virtually all commodities, namely oil, have declined significantly this year, dealing a harsh blow to the natural resource-dependent Canadian economy. In addition, its largest trade partner, the US, is suffering from economic woes of its own and is in no position to support the Canadian export sector anymore. The result is increasing unemployment and the never seen before decline in factory production in a quarter of a millennium. The most optimistic economists are forecasting GDP growth of 0.0% in 2009. The second prong of the attack against the CAD is being waged unintentionally by the country’s Prime Minister, who recently suspended Parliament in order to avoid a no-confidence vote in his leadership. In short, bulls for the Canadian Dollar (not to mention democracy) don’t have much to be excited about these days. Bloomberg News reports:
“The global backdrop is bearish for the Canadian dollar and domestic numbers are merely piling on,”said a senior currency strategist. “No one is looking for reasons to buy the Canadian dollar right now. They want reasons to sell.”
Post Details
Posted on December 16, 2008
at 1:28 pm
Written / posted by: Piere
Filed under: Credit Crisis, Currency Trading, News