Making sense of the markets this week: May 24, 2021
The Canadian good-news quandary
Thanks to surging commodity prices, the Canadian dollar is the best-performing major currency this year, and the loonie is at a six-year high compared to a basket of global currencies. It is certainly strange to hit a financial site and see the Canadian dollar at more than 83 cents compared to the U.S. greenback.
And, thanks to the resource boom and very generous stimulus packages, it’s possible the Canadian economy will be operating at full capacity in 2021. As always, COVID will be the wild card, but vaccinations are hitting new levels and COVID cases are falling across most of the country.
Here’s a very good Canadian and global vaccine tracker. It appears that Canada will soon top the U.S. in the percentage of citizens who have received their first dose.
That’s more good news for the economy—and mostly for our health, of course.
However, a strong Canadian dollar creates a potential economic divide in Canada according to this Financial Post article…
“For example, soaring prices for lumber, grain and oil are great for Western Canada, the country’s breadbasket and the source of more than 90% of its crude production. The higher costs, rates and currency that come with it are harder on the manufacturing sector, based in Ontario, and on cities.
One out of every two jobs lost due to the pandemic and still not replaced are in Toronto, Montreal and Vancouver. Low-wage workers, women and youth have been hit hardest. Yet, these regions and groups probably won’t benefit directly from any strong resource-driven recovery.
The strong dollar makes it more of a challenge for the manufacturing sector, as it makes our products more expensive.