Currency News: Canadian Dollar Fell to an 11-Year Low

Currency News

Currency News

The US dollar-Canadian dollar currency pair is inversely related to the Canadian dollar. It went up by 0.2% on December 18, 2015. The currency pair rose by 1.1% on the previous day. The currency is on the way to have one of the worst years. The weak domestic data added to the pressure on the pair. The inflation figures failed to live up to the market expectation. This would mean that the Canadian central bank might have to go for more easing in the next monetary policy meeting. The continuos fall of the Canadian dollar against the US counterpart is mainly due to two factors:the fall in oil prices and the monetary policy of the two economies.

Disappointing domestic data

Statistics Canada have published that the inflation for November on December 18, 2015. The CPI (Consumer Price Index) fell by 0.1% on a month over month basis against expectations of a rise of 0.1%. The core CPI fell by 0.3% against forecasts of no change. The wholesale sales for October also came out below the expectations. They fell by 0.6%.

Impact on the market

The iShares MSCI Canada ETF (EWC) was trading almost without any chnage with a slight rise of 0.02% on December 18, 2015. The Guggenheim CurrencyShares Canadian Dollar ETF (FXC) was also trading the same way with a slight rise of 0.03%.

Canadian ADRs (American depositary receipts) trading in the US markets were on a mixed note after the disappointing employment data. The Canada based ADRs, Canadian Natural Resources (CNQ) and Suncor Energy (SU) rose by 3.2% and 1.7%, each one, on December 18, 2015. Royal Bank of Canada (RY) fell by 0.74%.

According to Bloomberg, forecasters project more U.S. central bank rate increases next year while they expect the Bank of Canada to keep its own rate at 0.5 percent through to 2017. That would give the U.S. its biggest interest-rate advantage over Canada since the mid-2000s


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