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Economist: The Canadian Dollar’s Demise ‘Couldn’t Have Happened at a Worse Time
The U.S. greenback broke above $1.40 vs. the Canadian dollar late last week in the wake of softer-than-expected inflation and wholesale sales prints north of the border.
And according to Scotiabank Economist Derek Holt, the timing of the loonie’s slump is abysmal as it drains debt-laden households’ purchasing power precisely when big-ticket purchases, of such items as homes and autos, are running at all-time highs. And the higher they are, the farther they could potentially fall.
“The currency’s plunge couldn’t have happened at a worse time for the country’s household sector,” Holt lamented in a note published Friday. “When a currency declines as CAD has alongside a deep negative terms of trade shock, it is among the mechanisms through which markets price a large wealth transfer out of the country to the regions of the world that are large net importers of commodities.” Read More…
