Loonie Tunes – Derek Mayne’s take on USDCAD

As a child of the 70’s, one of my Saturday morning rituals was watching Looney Tunes and they were exactly that, just plain crazy. So much so, that it was really unbelievable. We laughed out loud in our pyjamas but never once carted an anvil to the top of a cliff or tried to strap ourselves to a rocket while wearing roller skates. I’ve just returned from a lovely lake side holiday back home and have to admit that the place does seem to have gone crazy.

Brent Donnelly (AM/FX) of HSBC published a comparison on Ontario with California in March 2016 pointing out that: “Ontario is the largest non-sovereign debtor in the world.”  As of today, Ontario’s debt was $306 Billion or, $22,000 per capita and some estimates have it going to $323 Billion. Consumer Credit and other non-mortgage debt levels are at the same level.  Want to really dump gas on the fire? Add in an over-inflated/leveraged housing market where house owners have an average of $70,000 in home equity lines of credit. Then just for fun add their share of the national debt which is about.$18,000. Then of course we have the possibility of NAFTA coming undone…

All of this makes it hard to believe in a strong CAD. With the Dollar Index rejecting today NFP miss, this (1.2350) could be the bottom for USDCAD with a return to this April’s highs (1.3795) or even higher to the 2016 levels of 1.45.

I’ve been wrong before but when I get it right…

By | 2017-09-01T16:49:02+00:00 September 1st, 2017|