Is BoC's Carney bluffing when he warns of interest rate hikes coming?
http://www.globalnews.ca/carney+warns+o ... story.html
USDCAD trading below 1.00 (CAD is a bit stronger than the USD)
Bernanke suggested interests will stay low through to 2014. Will BoC risk traders moving CAD further up with interest rate hikes?
He also warned traders not to bet that commodity price increases will lift the loonie up:
http://www.theglobeandmail.com/report-o ... le2407318/
The loonie trades relative to many commodity price levels (definitely not to Natural Gas though whose decade low pricing is only evident in North America). The only way to tank the CAD is for another bloodbath in the financial markets, thereby inducing "flight to safety" from CAD to USD or CHF (Swiss Franc) or YEN.
Aussie is trading above parity as of this post:
1 U.S. dollar = 0.963205548 Australian dollars
How much of Australia's export is to the US though? Majority of it go to China and other Asian "Economic Tigers", doesn't it? For Canada, aren't at least 70% of what we export go to the US?
USDAUD can go to 0.80 and it won't impact the Australia economy as much as a USDCAD exchange rate of of 0.80 would be devastating to Ontario.
European Union slowdown means slower growth. Also, jack up the interest rates in the US, and traders will likely demand more yield out of the EU.
Not sure if I should trust Carney's prognosis on where interest rates will be in the medium-term (which none of us can predict anyway)
Would love your thoughts?