As the loon flies
A study by BMO Nesbitt Burns today marks the 10-year anniversary of the beginning of the Canadian dollar's return to grace from its 62-cent lows, and the impact associated with the rise.
Over the same period, notes deputy chief economist Douglas Porter, almost 500,000 manufacturing jobs have been lost, offset by increases in the nation's resource industries. Canada's current account balance has tipped into deficit and its trade balance has eroded dramatically. And for investors, this "tectonic currency shift has caused an earthquake for relative returns."
Going forward, Mr. Porter and others project the loonie ()will remain strong as the factors buoying the currency persist. Among them are the weakening of the U.S. dollar, strong commodities prices and Canada's fiscal standing.
"It was 10 years ago this quarter that the Canadian dollar finally awoke from a multi-decade period of weakness to find itself at a record low of less than 62 cents (U.S.)," Mr. Porter writes.
"It then proceeded to rocket ahead by more than 70 per cent in less than six years, before wobbling heavily in the ensuing financial crisis and then finally settling back around parity (neatly up 62 per cent from the 62-cent low).
A study by BMO Nesbitt Burns today marks the 10-year anniversary of the beginning of the Canadian dollar's return to grace from its 62-cent lows, and the impact associated with the rise.
Over the same period, notes deputy chief economist Douglas Porter, almost 500,000 manufacturing jobs have been lost, offset by increases in the nation's resource industries. Canada's current account balance has tipped into deficit and its trade balance has eroded dramatically. And for investors, this "tectonic currency shift has caused an earthquake for relative returns."
Going forward, Mr. Porter and others project the loonie ()will remain strong as the factors buoying the currency persist. Among them are the weakening of the U.S. dollar, strong commodities prices and Canada's fiscal standing.
"It was 10 years ago this quarter that the Canadian dollar finally awoke from a multi-decade period of weakness to find itself at a record low of less than 62 cents (U.S.)," Mr. Porter writes.
"It then proceeded to rocket ahead by more than 70 per cent in less than six years, before wobbling heavily in the ensuing financial crisis and then finally settling back around parity (neatly up 62 per cent from the 62-cent low).