Canada Has “Priced Itself Out” With Energy Infrastructure Struggles Says Currency Hedge Fund Founder

John Taylor also says Loonie could fall to 63 cents vs US dollar by end of 2019.

The head of FX Concepts – one of the world’s largest currency hedge funds – says that the Canadian dollar could fall to 63 cents vs the US dollar, and says energy infrastructure struggles are a part of the reason.

As John Taylor told BNN about the Canadian dollar, “It’s just gone through this great spot in a decade long sense. That great spot has been that the U.S. economy was churning along, it was nice – it had friendly people down here. The price of Canadian products was good. Everything was in your favour, and now it’s not in your favour, and it looks like to me it’s going to be against you for three, four, five years.”  

Added Taylor, “This is Trump on the other side – you guys should not feel good about anything. There’s nothing here that says Canada is going to come out smelling like a rose in the NAFTA deal.”

He thinks the Canadian dollar could head above 80 cents vs USD in the short term, and then fall to ‘the low 60s’ by the time 2019 is over.

While Taylor says the TSX could make up the ground it lost to the S&P 500 in the near term, he says Canada is unlikely to benefit much from higher oil prices, ‘referencing the country’s struggle to get energy infrastructure built.’

“Commodity cycles are really long,” Taylor said. “The problem is all of this stuff has gone offshore – gone off to third-world countries – and basically Canada has priced itself out. At the same time, these commodity cycles are 30 years in length and we just came off a high.”

Taylor’s comments illustrate a key problem: While Canada can’t control the overall circumstances of the world energy market, we can do certain things to strengthen our energy sector, such as reducing taxes and reducing the burden of regulations. Instead, government actions have gone in the exact opposite direction and priced us out, which will leave our nation worse-off both now, and in the future.

Spencer Fernando