Canadian dollar costlier than US buck, whether anyone, anywhere in the world believes it or not, facts do not lie! As prices of oil escalated on Wednesday, the price of the Canadian dollar got a boost and cost more than the US dollar, trading at 0.1 % higher than the US dollar.
Pending Results Of NAFTA?
One of the reasons why the Canadian dollar might have got a major boost is due to the pending NAFTA deal. There is increased optimism going around that there would be an agreement that would soon be reached, which would renew the NAFTA (North American Free Trade Agreement) deal.
Secret sources revealed that in order to rework the NAFTA deal, Canada is now ready to give the United States of America, access to the dairy market of Canada, although to a limited extent. But, there are analysts who state very clearly that should the negotiations to revive the NAFTA deal fail between the US and Canada, it is very likely that this should see the Canadian dollar lose ground.
Factors Contributing To Boost The Canadian Dollar
There are quite a number of reasons for the rise in the price of the Canadian dollar and these are as follows:
- The unemployment rate in Canada dropped to 5.7%, the lowest seen since 1976.
- Rise in oil prices.
- 79,000 jobs added by Canada.
- Rising interest rates.
Is Canada Partly To Blame For The Spike In Oil Prices?
After US President Donald Trump threatened countries that he would impose severe sanctions on them if they were to import oil from Iran, there has been a major slump in the supply of oil in the world. Iran is one of the major exporters of crude oil in the world today.
As far as Canada is concerned, even its own oil producing companies are not benefiting from the surge in the prices of oil, as much as they would have wanted to. Fast is, analysts say that it is their very own crude oil supply problems, that has led to the hike in oil prices in Canada.
Another Reason For The Canadian Dollar To Hold Gains
It is a well known fact that when the prices of oil rise, so does the price of the Canadian dollar. But the Canadian dollar being valued more than the US dollar, is not something that one gets to see all the time.
But another reason for the increase in the price of the Canadian dollar, was due to the announcement of the US President Donald Trump, of tariffs on the imports of aluminum and steel. The reason for the surge in the price of the Canadian dollar is that Canada would be exempted from the levies, as it is a trade partner of the US.
Best Performing Major
On Thursday, the best performing major was seen to be the Canadian dollar. Yet another reason for this boost was the comments made by Mr. Stephen Poloz, the Bank of Canada’s Governor. It is said that Mr. Poloz has more influence over the value of the Canadian dollar, than any other person in the whole world.
In his speech, at the Yellowknife Chamber of Commerce, Mr. Poloz said that the Canadian economy was currently operating at almost its fullest possible capacity and that over a period of time, there will be a requirement for higher interest rates.
In the words of Mr. Poloz,
“The economic progress we have seen makes us more confident that higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed. We will continue to watch how households and the entire economy are reacting to higher interest rates. And we will be cautious in making future adjustments to monetary policy, guided by incoming data.”
Megan Davies is a reporter for White Pine Tribune. After graduating from the University of Toronto, Megan got an internship at the CBC News and worked as a reporter and editor. Megan has also worked as a reporter for Global Toronto. Megan covers economy and community events for White Pine Tribune.