For foreign-exchange traders leery of taking a firm position on the mercurial U.S. dollar right now, Canada’s currency is providing fertile ground for potential wagers.
For foreign-exchange traders leery of taking a firm position on the mercurial US dollar right now, Canada’s currency is providing fertile ground for potential wagers.
Against that backdrop, the Canadian dollar has shown itself to be the most resilient of all the other major developed currencies. It’s up close to 3 per cent against the Australian dollar, another commodity-linked currency and the next-best performer in the G-10. And various strategists reckon that the loonie, as some refer to Canada’s currency, is still relatively undervalued and primed to keep outperforming.
The recent pullback in resource prices that’s dragged the Bloomberg Commodity Index down more than 13 per cent from its peak has of course hurt the Canadian currency, but it has nonetheless held up relatively well versus other non-dollar peers like the euro and the yen. Canada’s central bank is expected to lift its benchmark rate by another half a percentage point at its next policy meeting on Sept. 7, taking it to 3 per cent , based on current forecasts by economists. Markets, meanwhile, suggest that the Ottawa-based central bank -- like its counterpart in Washington -- might even opt for something bigger to combat seemingly relentless inflation pressures.
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