Canadian Dollar (CAD) and US Dollar (USD)
Besides the physical proximity, there is also something between the United States and Canada that is near to each other - the currencies of both Canada and the United States trade at near parity. Currently, the Canadian Dollar (CAD, also informally known as the “Loonie”) is trading at 92.78 US. Cents (or 1 US Dollar compared to 1.078 Canadian Dollar). At this level, this is one of the best exchange rate for the Canadian Dollar against the US dollar (USD) since Oct 2008.
In fact, against the U.S. dollar in July 2009, Canada is THE best performer amongst the 16 most-active currencies tracked by Bloomberg, gaining a whooping 7.6 percent. This means a 7.6% increase in purchasing power for Canadian tourist travelling to United States!
The Canadian Dollar forecast to be more expensive that the US Dollar in the medium term due to several factors and trend:
1. A greater risk appetite resulting from the recovery of the global financial crisis helped bolster the commodity-linked Canadian Dollar, where raw materials account for more than half of the country’s export revenue. Canadian dollar is perceived as a relatively riskier currency in the forex market by traders, which tend to rise and fall in tandem with stocks and commodity prices.
2. The Bank of Canada made a statement in Jul 2009 which softens the hard tone it had taken after a surge in the
currency in Jun 2009. This might mean less intervention by the central bank towards stemming the appreciation of the Canadian Dollar against the US Dollar.
3. One of the main market maker – UBS AG closed out a trade that buys the US dollar against the Canadian Dollar. This might be viewed by some as the indicator that the US Dollar has not bottomed out against the Canadian Dollar.
