User: Brian Ripley: CAD Economy: Picture

Picture

U.S. Dollar Strength From the early 1990's to the early 2000's, the USD/CAD was trending up and increasing Canadian import costs on a weak CAD relative to the USD (top panel of chart). After 10 years the trend reversed and for the next decade to 2013 the CAD unit was strong against the USD allowing Canadians to buy more stuff at cheaper prices. Now the trend appears to be reversing once again with the USD on the ascendant. For the Canadian exporters who took advantage of a strong CAD and who used the FX advantage to invest in machine independence technology (IT & Robotics) as well as reducing middle management; they will probably transition well if the global slowdown is still in an early phase of a trend change (Bloomberg March 24/14 "China’s manufacturing industry weakened for a fifth straight month"). But for exporters who rely on import materials and for all Canadians who shop for imported goods, CAD depreciation is going to depress consumption, lower aggregate demand, reduce wage growth and deflate unpro

Comments

No comments yet.

...