Canadian Dollar Expected to Sink to Record Lows as Prospects for a Recession Grow

Canadian Dollar Headed to $0.62?

Many investors thought the Canadian dollar would stage a comeback in 2019. It’s starting to look like the opposite is true, with some analyst’s predicting the Loonie could slide to as low as $0.62 versus the U.S. dollar. There is a lot of merit to these calls. The Canadian economy is teetering on a recession, oil prices remain weak, Canadians are saddled with high personal debt, and housing prices are down.

After a terrible fourth quarter, where the Loonie fell 5.7% against the greenback (closing the year at $0.7328), the Canadian dollar staged a comeback in 2019. Between the start of the year and February 1, the Loonie climbed 4.1% to $0.7332; its highest level since late October 2018. The prospects for a strong loonie have since been severely tarnished. In fact, even the conservative big banks are predicting the Canadian dollar could slide to a record low of $0.62.

One big reason for this pessimism is the Canadian economy. Despite solid job growth (which has mainly come from Ontario), the Canadian economy is teetering on a recession. In the fourth quarter, Canadian gross domestic product (GDP) growth came in at a paltry 0.4%. Bay Street was looking for growth of between 0.08% and 1.2%. In the third quarter of 2018, GDP was 2.0%.

Even that 0.4% GDP growth in the fourth quarter is rosy when you consider the Canadian economy contracted in December by 1.0%. It was the second consecutive month that GDP fell and the third tumble in four months.1

What tripped up the Canadian economy? Consumer spending is slowing down; this is a bad sign since consumer spending accounts for close to 60% of the country’s GDP. Meanwhile, Canadian household debt is near record levels. During the fourth quarter of 2018, Canadian household debt reached a seasonally adjusted average of $1.79 for every dollar of disposable income. During the June to September period, that number stood at $1.78.2

The average Canadian household uses a record 14.9% of its disposable income to cover its debt. A whopping 7.3% of Canadians’ income, the most in nine years, is being eaten up by interest charges. This points to a growing number of Canadians having to access their RRSPs, taking out a second mortgage, or selling access just to manage their debt.

Housing prices nationwide fell in 2018 for the first time since 1990 and home sales across the country are expected to fall to a decade low in 2019.3 Oil prices remain depressed and new growth is being hindered by new export pipeline delays and provincial (Alberta) government production limits.

All of this is expected to put a dent in the Canadian economy, which could send it into a recession. We won’t actually know we’re in a recession until well after the fact, since economic data comes out weeks or months later.

If Canada does slip into a recession, that negative sentiment will put further pressure on investor sentiment, the Canadian dollar, and Canadian stocks. On that other hand, there are equities and investments that do well during a recession or economic weakness. The key is knowing which ones.

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

The slowing Canadian economy, which could soon be in a recession, will have a material impact on the Canadian dollar, stocks, and other investments. While most investors run to the exits when the markets are in turmoil, the trading experts at Learn-To-Trade.com can show you how to profit no matter what the markets are doing.

As Canada’s oldest and leading provider of stock market trading courses, the instructors at Learn-To-Trade.com will teach you how to conduct a technical analysis, read economic cycles, and spot market trends. You’ll also learn how to trade cryptocurrencies, about forex trading, foreign markets, commodities & futures trading, and stock index trading. We’ll also teach you about risk management and capital preservation.

At Learn-To-Trade.com we understand that investors have different needs. That’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

Sources:

  1. “Gross domestic product, income and expenditure, fourth quarter 2018,” Statistics Canada, March 1, 2019; https://www150.statcan.gc.ca/n1/daily-quotidien/190301/dq190301a-eng.htm
  2. “National balance sheet and financial flow accounts, fourth quarter 2018,” Statistics Canada, March 14, 2019; https://www150.statcan.gc.ca/n1/daily-quotidien/190314/dq190314a-eng.htm
  3. “CREA Updates Resale Housing Market Forecast,” The Canadian Real Estate Association, December 17, 2018; https://www.crea.ca/news/crea-updates-resale-housing-market-forecast-4/

Photo Credit: iStock.com/rzymu

The following two tabs change content below.
George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

Testimonial 1

Don’t hesitate jump into it right now. You will be glad you did!

Susan C

Learn To Trade
4.0
2014-08-19T04:45:40-04:00

Susan C

Don’t hesitate jump into it right now. You will be glad you did!

Testimonials 2

The ongoing support has been the reason for my success

Patrick L

Learn To Trade
4.0
2014-08-19T04:46:33-04:00

Patrick L

The ongoing support has been the reason for my success

Testimonial 3

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Steven R

Learn To Trade
4.0
2014-08-20T02:56:18-04:00

Steven R

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Joseph L

Learn To Trade
4.0
2014-08-20T10:36:37-04:00

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Harley S

The course is amazing. Where were you 30 years ago?

Harley S

Learn To Trade
5.0
2014-08-20T10:37:39-04:00

Harley S

The course is amazing. Where were you 30 years ago?

Partick M

I learned the basics I needed to trade successfully.

Partick M

Learn To Trade
4.0
2014-08-20T10:38:34-04:00

Partick M

I learned the basics I needed to trade successfully.

Iouri G

I like making money. I’m very happy, so far so good

Iouri G

Learn To Trade
4.0
2014-08-20T10:39:27-04:00

Iouri G

I like making money. I’m very happy, so far so good

Akos B

I learned things it would have taken me years to figure out

Akos B

Learn To Trade
5.0
2014-08-20T10:40:05-04:00

Akos B

I learned things it would have taken me years to figure out

Robert B

There is always someone ready to answer my questions.

Robert B

Learn To Trade
4.0
2014-08-20T10:40:59-04:00

Robert B

There is always someone ready to answer my questions.

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Uldus V

Learn To Trade
5.0
2014-08-20T10:41:40-04:00

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Dean K

I wish I knew about trading as a business years ago!

Dean K

Learn To Trade
4.0
2014-08-20T10:42:24-04:00

Dean K

I wish I knew about trading as a business years ago!

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Peter P

Learn To Trade
4.0
2014-08-20T10:42:57-04:00

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Shelley P

Learn To Trade
5.0
2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Amir

Hi George,

I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
Learn To Trade
5.0
2016-10-07T08:56:52-04:00
Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
4.4
14