A Closer Look On The Loonie

When the trading of prized minerals such as copper and gold dropped, the Canadian dollar was immensely affected. The loonie, as it is colloquially known, fell to less than one percent against the American dollar in August 2008. Today, it is one of the currencies that showed poor performance this year.

According to the CIBC World Markets’ senior economist, Avery Shenfeld, the prized minerals are losing strong foothold because a lot of markets have been anxious regarding the potentials of global development. She even forecasted that the Canadian dollar will only rise from lingering in an alarming state when there are telltales that copper and gold will move to the frontlines once again.

For those who might find the words of senior economist Avery Shenfeld from CIBC World Markets deeply straightforward, history will tell you that the Canadian dollar actually reached its peak simply because of the prized minerals.

Speaking of history, it was only after thirty years when the Canadian dollar finally equaled with the America dollar. And the reason behind is still with the prized minerals. Upon the strength of the loonie was also the weakening of the country’s tourism. The condition resulted to the reduction of flights bound for the United States as reported by Statistics Canada.

One hundred eighty degree turn

The delivery of crude dropped to $112 when previously, it increased to 1.4 percent. The Canadian dollar then needs to recuperate from the 3.9 percent lost since the price of oil per barrel is already at $147.27.

From the Banc of America Securities with headquarters in San Francisco, John Rothfield said that there has been a one hundred eighty degree turn in the price of commodities essential for trading. Worst, the Canadian dollar is lower compared to other sixteen currencies but has still bested South Korean won though.

Chief Technical Analyst, George Davis of RBC Capital Markets said that the Canadian dollar will achieve a base of 1.0560 to 1.0565 but will still drop to as low as 1.06 at the final leg of 2008.

Bloomberg News made its very own poll with thirty economists as respondents. According to them the Canadian dollar will even reach 1.10 in the next year.

Spreading the yield

Still from the poll conducted by Bloomberg News, the country’s bond is expected to climb to a percentage of 3.09. Meanwhile, the decade yield will only rise to 3.82 whereby the figure explains that it was based from 28 points in contrast to the previous 36 points.

The Canadian dollar may be struggling at present but definitely, it will act on all means to recover.