Back in April, we did quite a bit of blogging about the fact that the Canadian dollar was going to reach parity with its American counterpart. And sure enough, not only did our loonie match the greenback in value that month, but it ended up surpassing it. As expected, the stronger-than-the-U.S.-dollar loonie didn’t stay that way for too long.
However, just a short six months later, the Canadian dollar is back in the fight. According to John McCrank of Reuters, the loonie is set to hit parity once again. According to McCrank, a report was released earlier today indicating that private employers in the United States have cut upwards of nearly 40,000 jobs.
This is one of the reasons that the American dollar is hitting its lowest value against the euro in eight months and against Japanese yen in 15 years! In addition, the Canadian dollar is gaining strength thanks to the nation’s reputation as a “major commodity exporter”.
McCrank notes that Canadian “currency is often influenced by moves in prices for gold, oil, copper and natural gas. Most commodities are priced in U.S. dollars and a weaker greenback makes them cheaper in terms of other currencies.”
He also delivers the following numbers: “The Canadian dollar closed at $1.0107 to the U.S. dollar, or 98.94 U.S. cents, well above Tuesday’s finish of $1.0173 to the U.S. dollar, or 98.30 U.S. cents. The currency rose as high as $1.0063 to the U.S. dollar, or 99.37 U.S. cents, its highest level since April 30.”
The findings of the new Reuters poll estimates that the loonie will run a tight race with the greenback over the next year. About half of those surveyed for the poll believe that the neighboring currencies will be at par for a significant duration of time. Said Eric Lascelles, the chief Canada macro strategist at TD Securities: “The Canadian dollar is a whisker away from parity. Parity is very much in the sights right now.”
Apparently some banks haven’t received the memo yet. Upon hearing the news of the new parity battle today, one of our esteemed reps at Synergy mentioned that his bank has been “undercutting” the current value of the U.S. buck. “I’ve been trying to change an American twenty for weeks now,” he explained, “They keep telling me it’s less than a Canadian twenty!”