The Wall Street Journal suggests that Americans should think about investing in Canadian assets to take advantage of the recent interim weakness in the Loonie, as Canada's economic outlook hinges on China and emerging markets' demand for oil and commodities.
WSJ: While the loonie might bounce around in the next few weeks, the expected long-term trend is for Canadian vigor. Economists at TD Bank Financial Group forecast the U.S. and Canadian dollars will reach parity by year's end, thanks to general U.S. dollar weakness and Canada's stronger fiscal position. Canada, the world's 10th-largest economy, has avoided bank bailouts and central-bank interventions.
The retail sales figures aren't expected to reflect the recent rise in commodity prices that will likely buoy Canadian spending in the second half of the year. The U.S.'s neighbor to the north has long been tightly linked to the U.S., its biggest trading partner.
But the rise of the commodity demand from Asia is giving Canadians something else to watch.
Benjamin Tal, economist at CIBC World Markets, likens Canada's exposure to the U.S.'s woes as like a secondhand smoker. Bad but not a direct hit.
And with China scooping up oil and metals that Canada produces, China is taking a bigger role in Canada's fortunes.
Source: WSJ.com, June 19, 2009
