The Canadian dollar, by almost every account, is supposed to be heading lower, with forecasters calling for the loonie to head back towards US $0.75.
There were calls for the move as recently as Tuesday, with one headline stating, “Why a sharply lower Canadian dollar seems to be on the horizon.”
Even as the Bank of Canada raised interest rates last week the dollar failed to respond higher, owing to the cautious outlook from the bank governor Stephen Poloz.
Now with the U.S. dollar continuing to give ground and Canada reaching a deal on a new Pacific Rim trade accord, the dollar jumped almost a full cent in early trade to hit more than US $0.81.
Although NAFTA negotiations and the Bank of Canada have been weighing on the currency of late, investors continue to find reasons to buy the loonie.
This pop may be short-lived, but as in so many prior cases, don’t sell the Canadian dollar short.
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