Loonie Losses: Canadian Dollar Expected To Fall Further

Analysts who study the Canadian dollar expect our currency to continue falling in comparison to the US greenback.

As reported by Bloomberg, increased US interest rates – combined with the maintenance of low rates in Canada – is expected to contribute to continued weakness in the Loonie.

While the Canadian dollar has gained 0.6% compared to the US dollar so far in 2017, this is among the lowest gain among Group of 10 countries.

Even those modest gains may be short lived.

Scott Petruska – an advisor for SVB Financial Group in California – expects the Canadian dollar to fall to C$1.35 per US dollar.

Said Petruska,“Canadian volatility is very low, and when volatility is low that’s where the interest rates differentials become the dominant theme.”

Economist David Doyle says our dollar will pay the price for slowing growth in both the United States and China.

Doyle thinks the dollar will get even weaker than Petruska does, predicting it will go all the way down to C$1.53.

Trudeau’s weak economic policy

Being overlooked in the discussion of the falling Canadian dollar, is the economic “policy” being pushed by Justin Trudeau.

Canada is becoming a less attractive environment for investment, as taxes and regulations are increased. Of particular note is the flight of outside investment from the oil sands, as both the Trudeau Liberals and Notley NDP damage the sector with foolish big government policies.

Trudeau’s creation of a more anti-investment business climate will push capital out of our country, and is particularly foolish in light of upcoming changes in the United States. If the Trump administration goes ahead with any sort of border-adjustment tax and corporate tax reductions, Canada will become even less competitive.

To make matters even worse, the United States may soon be cutting personal tax rates, while Canadians are going to be hit with a carbon tax that will make everything more expensive and reduce domestic economic activity.

The combination of diverging interest rates and dangerous policies from the Trudeau government means we can expect even more weakness in the Canadian dollar, unless there is a rapid change of course in our economic policy.

Spencer Fernando