Do you have an invested interest in the Canadian Economy? If so, then you might want to look into the possible changes that will occur in the near future. The Canadian dollar has been shifting a lot more in recent months, and is expected to continue changing. The market is now being dubbed as ‘volatile’ in the eyes of experts who are closely watching the way the economy is changing constantly.
Now, the cause of the volatility is right now up in the air. Not in the way that we don’t know what’s causing it, but more like we don’t know how much these things will affect the Canadian Dollar, and whether there will be changes made in order to correct it.
Important components in the volatility of the Canadian Dollar
- The Central Bank of Canada – This is a bank that is a lot similar to the United States’ Federal Reserve’s, in that it has a vested interest in how much the Canadian dollar is worth. By raising or lowering interest rates, the Central Bank of Canada can greatly affect the value of a loonie (CAD). In the past, the Bank of Canada has used its capabilities in order to act against whatever it is that is threatening to shift the Canadian Dollar. In recent history, it seemed like it wasn’t going to do anything to change the sudden drops in the value of loonie. However, recently it’s made a comeback and is acting up to settle the economy once more.
- Oil Prices – Oil has been considered one of Canada’s most marketable exports – with good reason. Because of this, the value of CAD is quite interchangeable. Depending on how much oil is sold to the United States, this will drastically impact the cost of a Canadian dollar. The pricier it is sold, the higher the amount of the dollar; the lower the cost, the lower the value of the dollar.
- Trump – Now, if people in the US are wondering how the election of Trump affects the world, well here is a solid. Because of the surge of oil prices after Trump’s OPEC commentary, the Central Bank of Canada, finally decided to issue an increase in interest rates. This made the CAD go from a couple dozen cents lower than the USD, to almost doubling it, which is insane, if you think about it. This is due again, to Canada’s hold in the oil economy. Even just a 1% increase created quite the boom.
- United States’ Federal Reserve – As mentioned the United States’ Federal Reserve is much like the Central Bank of Canada, in that both can puppet the economy by hiking up or lowering interest rates. A change in one, will affect the other.
The Canadian Market is obviously affected by a lot of things, and sometimes a change in the economy can happen in the blink of an eye. There are so many different ways in which a drastic change can occur. This might be something you’d be interested in, or something you’d like to stay away from – either way, it’s not going to go away anytime soon.