Canadian Dollar Forecast:
According to the exchane rate calculator team – the Canadian dollar went into the second quarter in a position of strength against the U.S. dollar, but additional hard-won power in early February came after the U.S. dollar / Canadian dollar high of 1.1875. If time was the local currency’s strength and pride of Canadians, it is now a burden on the economy.
Being a major trading partner of the United States, the appreciation in value of Canadian dollar against the U.S. dollar was undoing the increase in exports. Moreover, during the first quarter showed weakening the correlation between crude oil prices and the value of the Canadian dollar, despite the fact that oil production is a component of the Canadian Home Economics. In the second quarter, several key factors will determine the future of the Canadian dollar, including the export trade, domestic economic growth, the trend of commodity prices and stability in American demand.
Export trade remains the engine of economic growth – but for how long?
For four years, the boom in trade was dictated by the cause of oil price fluctuation of the Canadian dollar. However, this boom ended in 2006, when oil prices rose a record 78.40 dollars a barrel. In mid-January, 2007, oil prices have dropped below $ 50 a barrel, before recovering slightly in February. The decline in commodity prices caused offsetting current account surplus, from 5 billion Canadian dollars to 3 billion Canadian for the fourth quarter, dragged down with it the Canadian dollar. Recently, however, the monthly estimates of trade are slightly more encouraging, when based on a calculation of the January balance of goods and services jumped recovered to -6.35 billion Canadian dollars.
Previous weakness of the Canadian dollar played a major role in the turn occurred at the Canadian economy, which followed the Canadian dollar rose against the U.S. dollar low of 1.1875 to the gate of 1.1501. But the renewed strengthening of the currency may stand undoing economy. If the Canadian dollar will continue to grow during the second quarter rate of the first quarter, the main trade partner of the country – United States – may reduce the extent of purchases of Canadian products that undermine the stability of the entire economy. Moreover, if commodity prices continue to moderate, it will bring about the erosion of goods exported erosion of Canada’s balance of trade.
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