Last week, the Canadian Dollar traded at 94 cents against the USD,
its highest level in over 30 years. This event is even more unbelievable
considering the Loonie’s all time low against the USD occurred less
than five years ago, in 2002. Now, many analysts are cautiously
optimistic that the Loonie will be trading at parity with the USD by
year-end, and perhaps continue appreciating past that point. Rising
natural resources prices and a strong economy may drive Canada’s Central
Bank to raise interest rates, at the same time that its neighbor to the
south is contemplating lower rates. However, not all analysts are
quite so optimistic. The Associated Press reports:
But with an expected dampening in the
industrial and manufacturing sector on its way, other analysts predict
the Canadian dollar will start to weaken because commodity prices will
pull back a bit and Canada’s economy may start to struggle because of
the strength of the loonie.
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