Since the beginning of December 2014, the Canadian dollar has lost roughly10% of its value against the U.S. dollar. This is due in large part to declining oil prices, less than stellar economic data coming out of Canada, and solid economic data coming out of the U.S. Investors looking for a way to take advantage of the volatility of the Canadian dollar might want to consider taking Forex trading courses from Learn-To-Trade.com.
Loonie Climbing Against Greenback
On March 18, the Canadian dollar hit a six-year low of $0.78 U.S. against the U.S. dollar. Between July 2014 and March 2015, the loonie tumbled 16% against the greenback.
Fast forward a few weeks and the Canadian dollar is showing signs of life. For the week ended Friday, April 17, the loonie racked up its best gain in four years; up three percent week-over-week. So far this month, the loonie is the top-performing currency among its developed nation peers.
Admittedly, the increase is all relative. It’s easier to have a strong week and be a top performer after three quarters of successive declines. The recent surge in the value of the loonie compared to the U.S. dollar should make investors sit up and take notice. Moreover, they should try and determine whether the loonie has turned a corner or if the swing to the upside is temporary.
3 Reasons Why the Loonie Is Rebounding
Reason #1: Oil Prices
Crude oil accounts for 17% of Canadian exports, so it’s not a huge surprise to see the loonie tumble in step with oil prices. Between the beginning of July 2014 and the middle of March, oil prices were down 60% at around $42.00 per barrel; around the same time the loonie hit a six-year low versus the U.S. dollar.
Since that time, the price of oil has rallied, up more than 30% at approximately $58.00 per barrel. Over the same period of time, the loonie has climbed 4.5% against the U.S. dollar. Have oil prices bottomed and will they continue to climb or is this a false alarm?
Softer U.S. Dollar
The Canadian dollar has been trading low against the U.S. dollar because the greenback has been on a tear—against everyone. For example, since the beginning of July 2014, the U.S. Dollar Index is up more than 23%.
What goes up must come down—and back again. A spat of weak economic data out of the U.S. has seen the U.S. Dollar Index slide two percent over the last couple of weeks. That said, the U.S. has the world’s largest economy with an eventual rebound; and the greenback will continue to march higher.
Improving Canadian Economy
Canada’s economic performance has improved since the beginning of the year. The Canadian economy surprised everyone in March when it added 28,700 jobs. Compare that to the previous month where it lost 1,000 jobs. Add to that strong home sales and a gain in retail sales and the Canadian dollar looks a little stronger. Can the Canadian dollar maintain its momentum as we head into the summer months? Or will oil prices continue to weigh on the Canadian dollar? Keep in mind, for every $10.00 gain or loss in oil prices, the Canadian dollar moves $0.03 to $0.05 in step.
Taking Forex Trading Courses in Toronto
When it comes to money management, most investors think the only financial tool at their disposal is trading stocks. But the fact of the matter is, Forex (foreign exchange) is the most popular and lucrative investing tool out there.
For example, the NASDAQ has a daily turnover rate of between $50.0 billion and $100 billion. The daily average turnover for Forex is $5.3 trillion. In 2010, the daily turnover was $4.0 trillion.
Unlike the stock market that goes in bear and bull market cycles, Forex moves up and down on a minute-by-minute basis. With Forex, investors can make money no matter where the stock market is heading.
Forex is a global currency market where retail investors, businesses, banks, and governments go to speculate on the price of one currency against another. In the current market, if you think the Canadian dollar will weaken against the U.S. dollar, you should sell the Loonie and buy greenbacks.
If the U.S. dollar climbs in value, the purchasing power to buy Canadian dollar increases. Like any investment strategy, there are risks and rewards. If you bet against the Canadian dollar and the greenback strengthens, you are in a losing position.
Where the stock market has regular trading hours, Forex is open 24/7 with trades conducted worldwide in major financial centres in every time zone; from New York to London, Zürich, Tokyo, Hong Kong, and Sydney.
Forex Trading Courses in Toronto from Learn-To-Trade.com
To take advantage of fluctuating global currencies, you need to take a comprehensive Forex trading course. Regardless of where you currently are as a Forex trader or where you want to be, Forex courses taught by professionals will help you successfully navigate the world of currency trading.
Forex trading courses at Learn-To-Trade.com in Toronto are taught by professional traders and are designed to help investors confidently manage their investments and make consistently profitable returns.
As Canada’s oldest private financial educator, the professionals at Learn-To-Trade.com teach members proven Forex strategies that help them profit in any market condition. Thanks to Learn-to-Trade.com’s hands-on approach, Members can participate in simulated Forex trading and have real-time access to global Forex market using the same state-of-the-art software that professionals use.
Economist.com, September 14, 2013.