Canadian Dollar Fell to an 11-Year Low


Dec. 21 2015, Updated 10:55 a.m. ET

Canadian dollar continues to fall

The US dollar-Canadian dollar currency pair is inversely related to the Canadian dollar. It rose by 0.2% on December 18, 2015. The currency pair rose by 1.1% on the previous day. It’s on course to have one of the worst years for the Canadian dollar. The weak domestic data added to the pressure on the pair. The inflation figures failed to live up to the market expectation. This would mean that the Canadian central bank might have to go for more easing in the next monetary policy meeting. The downtrend of the Canadian dollar against the US counterpart is mainly due to two factors—the fall in crude prices and the divergent monetary policy of the two economies.

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Disappointing domestic data

Statistics Canada published the inflation for November on December 18, 2015. The CPI (Consumer Price Index) fell by 0.1% on a month-over-month basis against expectations of a rise of 0.1%. The core CPI fell by 0.3% against forecasts of no change. The wholesale sales for October also came out below the expectations. They fell by 0.6%.

Impact on the market

The iShares MSCI Canada ETF (EWC) was trading nearly flat with a slight rise of 0.02% on December 18, 2015. The Guggenheim CurrencyShares Canadian Dollar ETF (FXC) was also trading on a flat note with a slight rise of 0.03%.

Canadian ADRs (American depositary receipts) trading in the US markets were on a mixed note after the disappointing employment data. The Canada-based ADRs, Canadian Natural Resources (CNQ) and Suncor Energy (SU) rose by 3.2% and 1.7%, respectively, on December 18, 2015. Royal Bank of Canada (RY) fell by 0.74%.


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