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Loonie Paradox: Does China Drive Canada/US Dollar Rate?
Over the past two decades the Canadian dollar (CAD) has traded in a wide range versus the US dollar (USD). Between 2002 and 2007, the loonie rose from 0.621 to 1.0865, a 75% gain. CADUSD plunged 30% during the 2008 financial crisis, recovered by 2011 to nearly its previous high before sliding almost 40% over the next five years. Since 2016, CAD has been trading in a tight range versus USD. One factor, according to our regression analysis, explains about 77% of the moves in the Canadian dollar: commodity prices. Although Canada has a diverse economy and exports many services and manufactured products (such as cars, ... (full story)