The Canadian dollar is down 0.2% this morning giving up yesterday’s gains. The Loonie continues to trade in the middle of where it has been trading for the last few months. Stocks are taking a breather and are down slightly for the third day in a row as they consolidate gains that have seen them reach record levels (mostly on vaccine optimism and political stability in the US). The economic calendar is quiet for both the US and Canada for the rest of this week. Some analysts are beginning to express pessimism about the Canadian dollar based on a reading of September’s portfolio investment flows which showed a decline in international appetite for Canadian debt. According to this view, the decline in net portfolio investments, combined with a persistent trade deficit with the US, may ultimately push down the value of the Canadian dollar against the US dollar. It is an interesting opinion that may bear out but we think that one month’s reading of net portfolio investment flows are not sufficient to qualify as a trend, especially in light of the all the other factors impacting exchange rates at the moment.
