Canadian Dollar Is Holding on Strong after Gains
The Canadian loonie made gains on Wednesday and then held onto those gains throughout Thursday. On Wednesday, the Canadian dollar hit a high of 1.2472, which was the strongest intraday trading in weeks.
Currently, the Canadian government is deciding whether to release further stimulus checks to citizens as restrictions continue for Covid-19’s third wave in the country. Strong performance by the Canadian dollar is also attributed to a better than expected economic outlook from the Bank of Canada.
It is not all good news from the Canadian economy, though. The Bank of Canada expressed concern that the high price of housing may lead to stretched lending and borrowing. The fear is that this economic environment could cause a major downturn for individual households as well as for financial institutions. Housing prices were up 1.1% for March compared to February, and reports show an increase of 7.9% each year for the past few years.
USD/CAD is doing well as it makes gains up from a monthly low of 1.2460, but analysts predict those gains could be quickly lost as the Canadian central bank starts to pull back on the quantitative easing program. Significant changes are not expected, but day traders could see enough action to make the instrument worth watching closely.
By comparison, the economic outlook for the US is considered volatile at this time, with factors like covid restrictions and vaccination spread working significantly different from its northern neighbor. Political unrest and division continue to strongly affect the US economy and the US dollar in unpredictable ways despite the current administration’s claims of working toward national unity.
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