Say hello to a 66-cent loonie
If there is to be one casualty from a Donald Trump win , it is the Canadian dollar — which has already been under pressure from the fact that Canada’s GDP is expanding at a mere 1% annual rate versus close to 3% south of the border. And the growth gap has already generated a deepening interest rate gap between the two countries as the Bank of Canada turns more dovish and the Fed becomes more circumspect.
The math is quite simple because the implications of a further increase in Canada’s unit labor cost competitiveness gap will necessarily require a weaker currency as a balancing force . Failure of Ottawa to respond will only reinforce direct investment outflows and act as a further weight on the currency.
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