Canadian Dollar

The Canadian Dollar sits in the middle of the pack at #5, scoring -9 — neither clearly strong nor weak. Interest rates are the main headwind. At around 2.3%, the Canadian Dollar pays far less than higher-yielding peers like the dollar or pound, which makes it less attractive to carry-seeking capital. Broader risk appetite is positive, which helps the Canadian Dollar. As a currency tied to global growth and trade activity, it tends to strengthen when investors feel confident and weaken when they retreat to safety. On the commodity side, firm prices for oil are providing a clear boost. Strong export revenues support the currency through the balance of payments and improve the terms of trade. The economy is a concern. Rising unemployment and softening labour data suggest the growth outlook is weakening, which could push the central bank toward easier policy down the line. On a valuation basis, it looks cheap versus its own one-year range, which may help cushion the downside from here.