{"id":786,"date":"2009-12-29T22:52:26","date_gmt":"2009-12-30T03:52:26","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=786"},"modified":"2009-12-29T23:06:10","modified_gmt":"2009-12-30T04:06:10","slug":"canadian-dollar-resists-us-dollars-advance","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2009\/12\/29\/canadian-dollar-resists-us-dollars-advance\/","title":{"rendered":"The Canadian Dollar Resists the U.S. Dollar’s Advance"},"content":{"rendered":"

As the U.S. dollar index has steadily advanced this month, the relative strength of the Canadian dollar has perplexed me. The Canadian dollar has long seemed overplayed to me as a commodity-positive play given the country’s heavy dependence on the health of the U.S. economy – which I continue to assume will perform weakly in the near-term – and given interest rates as low as those in the U.S. I finally found a reasonably good set of explanations for the Canadian dollar’s continued resiliency relative to the U.S. dollar in a recent WSJ article deceptively titled “Bank Of Canada An Obstacle For Canadian Dollar<\/a>.” Here are some key points:<\/p>\n

    \n
  1. The dollar is rising as traders bet on a stronger U.S. economy. Canada is a tremendous beneficiary of American expenditures: 78% of Canada’s exports went to the U.S. in 2008<\/a>.<\/li>\n
  2. Given the on-going global economic recovery, commodities in general continue to perform relatively well despite the U.S. dollar’s strength. Canada benefits from this recovery.<\/li>\n
  3. Canada does not have sovereign debt issues (debt-to-GDP ratio is “only” 79%).<\/li>\n<\/ol>\n

    The Canadian dollar is now nearing 15-month highs against the U.S. dollar (see chart of the currency ETF, FXC, below). If the Canadian dollar can benefit from both a weak U.S. dollar and a strong U.S. dollar, I suppose that makes it a “can’t lose” investment. These developments must further frustrate the Bank of Canada<\/a>!<\/p>\n


    \n
    \"The
    The Canadian dollar is still trending upward, nearing 15-month highs<\/figcaption><\/figure>
    \n*Chart created using TeleChart:<\/strong>     <\/a>
    \n<\/center><\/p>\n

    Be careful out there!<\/p>\n

    Full disclosure: no positions<\/p>\n","protected":false},"excerpt":{"rendered":"

    As the U.S. dollar index has steadily advanced this month, the relative strength of the Canadian dollar has perplexed me. The Canadian dollar has long seemed overplayed to me as a commodity-positive play given the country’s heavy dependence on the health of the U.S. economy – which I continue to assume will perform weakly in … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[235,20,21],"tags":[296,297,1591],"class_list":["post-786","post","type-post","status-publish","format-standard","hentry","category-canada","category-forex","category-u-s-dollar","tag-canadian-dollar","tag-fxc","tag-u-s-dollar"],"yoast_head":"\nThe Canadian Dollar Resists the U.S. Dollar's Advance - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2009\/12\/29\/canadian-dollar-resists-us-dollars-advance\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Canadian Dollar Resists the U.S. Dollar's Advance - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"As the U.S. dollar index has steadily advanced this month, the relative strength of the Canadian dollar has perplexed me. 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