Chart of the week: the loonie takes off
The Canadian dollar, nicknamed the loonie, has leapt to a two-year high around $1.21 against its US counterpart as a result of Canada's robust eocnomy and higher interest rates.
The Canadian dollar, nicknamed the loonie, has leapt to a two-year high around $1.21 against its US counterpart. The Federal Reserve's pace of interest-rate rises is now likely to be slower than initially assumed, while the robust Canadian economy has prompted the Bank of Canada to bring forward its rate hikes. Last week it nudged the benchmark rate up from 0.75% to 1%. GDP growth has hit an annual pace of 4%, notes Theophilos Argitis on Bloomberg. Household spending has reached a nine-year high thanks to a healthy labour market and rising houseprices.
Viewpoint
"Current [US market] psychology cannot be described as euphoric' Most people seem aware that the good times won't roll on forever. Since there hasn't been an economic boom in this recovery, there doesn't have to be a major bust. Leverage at the banks is a fraction of the levels reached in 2007, and it was those levels that gave rise to the meltdowns Importantly, sub-prime mortgages and sub-prime-based mortgage-backed securities were the key ingredient whose failure directly caused the global financial crisis, and I see no analogue to them today, either in magnitude or degree of dubiousness. It's time for caution... not a full-scale exodus."
Howard Marks, Oaktree Capital
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