The Canadian Dollar Price Outlook: USD/CAD virus breakout may be overdone. It may appear that the Canadian Dollar is making its rebound after months of dragging down the dollar against the Euro. So, is the outbreak in the U.S. dollar really to blame for the weakness of the Canadian dollar?
A currency outlook: With this virus breakout, traders must take a look at a few variables before determining whether or not the currency outlook is overdone. First, of course, the currency outlook is affected by inflation. But, no one has explained why the USDPI is still so high.
Have you ever wondered why homes and real estate are selling at such a low price? As we mentioned earlier, this is attributed to the rise in U.S. dollar. Now, if the dollar makes an about face and drops further, will that make it difficult for Canadian businesses to sell their goods and services? Will that devalue the Canadian dollar?
Will Canadian business owners be forced to close their doors? Are these financial implications worth the depreciation of the Canadian dollar? Will this virus breakout or is it another part of the CME data mis-reports?
With all the ramifications of a weakening U.S. dollar, it’s easy to understand why Canadian business owners would want to cut costs. Businesses, unlike consumers, don’t have a lot of leverage when it comes to the economy. They can’t get bailed out.
That being said, they are in a position where they can influence the direction of the economy. This can be done with low interest rates, increased exports, and investment in the business community. These things have been known to change the direction of the economy.
The currency outlook is made up of three elements. One is Canada’s strength, which is tied into its currency strength. Two, there are two major contributors to the CME “economic report” fiasco.
The first of these is Non-Cancellation of the Swiss National Forex Rate. If this happens, the Bank of Canada should be able to protect the Canadian dollar because it would be the only one of the four main central banks participating in the process. How will this impact the Canadian dollar outlook?
Well, there are two reasons that these central banks are being non-competitive. First, they are protecting the power of their own currency, which is weaker than the dollar. And second, they are attempting to force their clients, who use the Canadian dollar, to preserve the status quo.
Central banks are well aware that all the global economies are teetering on the edge of collapse and that new debt and deficit levels are growing every day. The world is becoming a mere shadow of what it once was.
You see, the central banks know that inflation is here to stay and that the burden of inflation is now put squarely on the shoulders of the common man and woman. Not only do these central banks know this, but they also know that they can manipulate the economies of the world.
For them, nothing is beyond their reach. And in this case, that means everything. It appears that if the CME data is correct, and if they agree to cancel the Swiss price, the Canadian dollar may soar high enough to continue a rise in this virus breakout.