The Bank of Canada wants the Canadian dollar to remain low to continue to spur on the marked improvement in Canadian exports versus the results of stronger economic growth.
This could result in higher interest rates, which would pull the dollar higher.
At this point, the market seems to be winning the battle, pulling the dollar higher in the past several days.
But according to Andrew Grantham at CIBC in this morning’s Financial Post, what looks like a roller coaster ride for the loonie is just the market trying to find the right direction.
That could come if the Bank of Canada allows interest rates to rise in the second half of the year to match the growing economy, which will pull the dollar up with it.
Meanwhile, lower oil prices are continuing to pull from the other side, putting downward pressure on the dollar.
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