Canadian Dollar Declines Amid Trump Expectations

This is a U.S. news story, published by financialpost, that relates primarily to Bipan Rai news.

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financialpost

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The loonie vs. The Donald: What tariffs, tax cuts and Trump 2.0 mean for the slumping Canadian dollar

Summary

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The Canadian dollar has been steadily declining over the past couple of months .

The loonie is down just over four per cent against its U.S. counterpart since late September , and 1.5 per cent since Nov. 5 .

The currency markets’ trigger response to Trump ’s tariff throwdown is understandable, says Bipan Rai , managing director of ETF and structured solutions strategy at BMO Global Asset Management .

The Fed ’s funds rate sits in the range of 4.5 to 4.75 per cent, 100 basis points higher than the Bank of Canada’S. benchmark lending rate .

That spread between the two sets of rates is called divergence, and the more interest rates diverge, the greater the chance the Canadian dollar will fall against its U.S. counterpart.

Rai thinks the spread could go as high as 125 basis points in the current cutting cycle.

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