Canadian Dollar Plunges As Bank of Canada & Federal Reserve Diverge
The Canadian and American economies often move together, but the loonie is the latest sign that won’t be the case this time. The Canadian dollar has been plunging against the US dollar, a.k.a. Greenback. That loonie’s erosion was amplified this month as the two central banks diverged on outlooks for their respective economies, with the American economy set to outperform the Canadian economy significantly. This kind of weakness hasn’t been observed outside of the deepest global recessions, and with Canada prioritizing non-productive investments—relief may not be around the corner.
This time may be different. The US economy is looking to rebuild its domestic industry by re-shoring the industries that were sent overseas in the previous 30 years. It’s a bi-partisan priority that the outgoing president embraced, and the incoming president plans to ramp up during his 4-years in office. Creating jobs in Canada due to a weak loonie doesn’t further that strategy; it’s directly at odds with it.
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