Canadian dollar benefits from continuing higher energy prices.

By MoneyWay | Oct 12, 2021

Economists are starting to worry that the recent jump in energy prices is not a short-term blip, and it will have a                 protracted effect on inflation and a dampening effect on economic growth. While the current excuse of “supply chain disruptions” is valid, the question that arises is, “but for how long”? Natural gas has almost doubled this year and it is the commodity that has the most impact in terms of household expenses. Home heating costs have skyrocketed, in Britain, natural gas distributors have gone bankrupt that has now left governments on both sides of Hadrian’s wall scrambling. If this is not checked it could severely impact not just the British economy but all of Europe.

The Canadian dollar has rallied against the USD even though the US is supposedly self sufficient in energy needs. Oil and gas is still being sent south of the 49th parallel and will stay that way for some time. However, that being said, this may leave the Bank of Canada in a bit of a lurch, as it has intentions of hiking interest rates as soon as possible. If it does so soon, then the CAD may get even stronger posing problems for Canada’s exporters as their products become more expensive to global markets.

Expect the CAD to remain strong to the USD for the rest of the day.

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