Canadian Forex investors are now focused on the Loonie - the Canadian dollar currency. With the recent increases in the Canadian dollar to parity with the U.S. dollar it has been a long run up from a low in 2002 ofU.S. .62. Basically the increase in the value of the Canadian currency was attributed to climbing oil , petroleum and commodity prices.
Since the beginning of this year of 2007, however the primary drivers of the Canadian dollar’s success have been the stronger than expected Canadian economy and a new wave of merger and acquisition activities.
Of greatest significance is the dramatic change in the outlook for the Canadian economy over a relatively short period of time. The most recent economic data has consistently beaten expectations, in some cases with a wide margin.
The first quarter G.D.P. growth came in a blistering 3.2 % as compared to bank of Canada’s estimate of 2 %. At the same time inflation continues to be higher than the Bank of Canada’s targeted range.
In its most recent Monetary Policy Report - the Bank of Canada clearly has indicated and continues to indicate that its biggest concern is that of inflation and that further interest hikes are in the offing.
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