The Canadian economy continues to be relatively strong, and this is reflected in the value of the loonie, which gradually rose.
The big drop in the price of oil during July had a relatively minimal effect on the C$. However, every headline from Europe moves the currency, like all risk currencies.
- Employment is rising: In recent months, Canada’s work force has been on the rise, even if it slowed a bit in May, the situation is far better than in the US.
- Economy is growing: Canada’s economy continued growing also in April, the first month of Q2, by 0.3%. This is about the time that the US slowdown began. So, Canada continues doing relatively well.
- Toronto housing bubble: The Canadian authorities began recognizing that the rise in house prices is not healthy, and singled out Toronto. The bubble is probably not limited to Toronto and could endanger the whole economy. However, at least there’s awareness.
- US demand: Despite enjoying a healthy economy so far, the slowdown in the US could weigh on Canada and its dollar as well. Currently, the slowdown in the US isn’t that bad, but if things get worse, this is an important factor to watch.
All in all, Canada remains strong and USD/CAD parity could be challenged again. A lot depends on the upcoming job report in Canada, and much less on the price of oil.
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