The financial headlines continue to be dominated by news of retail investors (usually starting out on Reddit) causing meteoric rises in heavily shorted stocks like GameStop (and in the Canadian context, Blackberry). The David vs. Goliath battle is fun to watch but the phenomenon is not likely to last. It has however highlighted the possibility that stock prices may be at unsustainable levels and that there may be a correction coming in the stock market. As we have been noting to our clients, all of that matters to the Canadian dollar because the Loonie has been tightly correlated to stock price movements for the past few months. The Canadian dollar is down another 0.3% this morning against the US dollar after losing close to 1% yesterday. It is now trading near the lowest levels it has seen since the middle of December. The Canadian currency was actually trading even lower this morning but gave up some ground after the release of fourth quarter GDP data in the US came in at below expectations. The US economy grew at an annualized pace of 4.0% in the fourth quarter leaving it with a decline of 3.5% for the year.
