Loonie struggles: This is what is dragging the Canadian dollar lower
BNN Bloomberg
The Canadian dollar’s drop against the greenback is partially due to close ties with resource and commodity prices, according to one foreign exchange strategist, causing it to be sensitive to swings in global growth and equity market trends.
The Canadian dollar fell below the 75 cents U.S. mark Monday morning to the lowest point since early November 2020. Shaun Osborne, a chief foreign exchange strategist at Scotiabank, said in a note to clients Monday the current risk backdrop and U.S. equity market trends appear to be the most significant factors driving the downward performance of Canada’s currency.
“The Canadian dollar generally is treated as what's termed a high beta currency. That's to say it's been a resource-based economy, the Canadian dollar and its linkages to resource prices [and] commodity prices are sensitive to swings in global growth or the outlook for global growth,” Osborne said in a phone interview Monday morning.
Equity market trends are an important benchmark of investors’ feelings about the growth outlook, Osborne said.
