![]() But it's falling by the yardstick that most Canadians measure it against: the U.S. Compared to other currencies like the euro, the British pound and the Japanese yen, the Canadian dollar has actually gained ground this year. dollar is getting walloped right now, he says. The loonie looks like it's taking a swan dive because just about everything that isn't a U.S. economy is much stronger than everywhere else," says Adam Button, chief currency analyst with foreign exchange firm ForexLive. dollar because it is the pre-eminent safe haven and because the U.S. "There's been an absolute flood of money into the U.S. dollar is seen as the safest place to keep your money during times of uncertainty. That rule of thumb is even more applicable than usual right now, because the U.S. How rate hikes impact a currencyĪll things being equal, rate hikes increase the value of a country's currency because it makes it more worthwhile for foreign investors to park their money there: they'll get a higher return for doing so. If the Fed rate goes to 4.5 next year, as investors expect it will, that's far higher than the Bank of Canada is likely to be able to go, which is why the gap in the two countries' currencies is widening. "At some point the market will focus on the Fed's next cycle but this is far off." "Rates will peak higher than assumed a few months ago, and stay there longer than initially expected," said Audrey Childe-Freeman, a foreign exchange strategist with Bloomberg Intelligence. bank rate will ultimately go as high as four or even five per cent. Pricing in investments pegged to the Fed rate suggest investors think the U.S. Federal Reserve is slated to do just that next week, raising its benchmark rate by at least 75 basis points to 3.25 per cent, if not more. increases the odds that the country's central bank will have to raise its interest rate even more aggressively than it has been. From the American point of view, Canada provides a good comparison and. Analysis Slowing inflation does not mean you get your spending power back Canada has a national health insurance program NHI (a government run health.
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