That the Canadian dollar has weakened in an environment of significant risk aversion, collapsing energy prices, and general demand for US dollars is unsurprising for Josh Nye, a Senior Economist at the Royal Bank of Canada.
Key quotes
“Given continued uncertainty over the depth and duration of coronavirus containment measures, it’s too early to say whether risk appetite or oil prices have hit bottom.”
“New easing announced by the BoC, it cut the overnight rate to its effective lower bound and launched its first QE program, could also send the currency lower.”
“We don’t think the Canadian dollar is headed for its all-time low of 62 US cents seen in the early-2000s.”
“A healthier fiscal position and less reliance on external borrowing should provide a backstop. 69 cents might not be as bad as it gets, but we doubt 62 cents will come into view.”
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