Canadian and Aussie Dollars Nose Dive as everyone piles into U.S dollars faring the worst – March 18, 2020
As I’m writing this if you hold U.S dollars it will cost you $0.59 cents to buy $1 Aussie dollar If you hoard U.S dollars you can also currently buy $1 Canadian dollar with $0.69 cents USD.
For both respective countries, the problem will be if and when things normalize because although this could be a temporary decline, the real problem the world is facing right now are bloated inefficient public sectors. If the global debt is refinanced, central bank interest rates will go up, if debts aren’t refinanced, currency, as we know it officially just, became expiring banknotes, which is another way of saying hyper-inflation!
The private sector appears exhausted supporting all of these government programs, and it appears that Quantitative easing isn’t working anymore and what the market appears to want to higher or normalized interest rates because a lot of fund managers are under a lot of pressure to finance the retirements for millions of people.
Now in years, past people could simply retire off-market interest rates, but now, people are being forced into the stock market because of inflated mortgages and public sector spending.
This was my fear, was that the Canadian dollar would be forced toward and would remain there, which would equate to a sharp rise in the cost of living.
Justin Trudeau has been very lucky that Gas prices remained low while he was prime minister, but if Saudi Arabia and Russia end this supposed argument they’re having and life begins to normalize there’s no guarantee that Canadian dollar won’t depreciate permanently.
Justin Trudeau’s current economic policies are very unfriendly to the Private Sector, who have now that people have fled the Canadian the dilemma will be to attract them back, especially the people who don’t have to live in Canada. The U.S elections are right around the corner and that entire period leading up to November will present a different set of challenges for the Canadian economy.
Anyway, it appears that there’s a push to normalize interest rates, this is very bad for Canada and Australia who have been financing their housing markets with cheap money. With near 0% interest rates, banks are already having to subsidize Canadian mortgages, think about that for a second! This is only the first month of Coronavirus!
I know most Canadians and people globally might be feeling the fear of Covid-19, but from an economic standpoint, what people aren’t understanding are the number of people who just cashed-out of the market! Meaning it’s going to take a lot for them to get back in again. Although this is hard to comprehend right now, but borrowing money just got more expensive!
Again a reminder that on March 18th it will cost $0.69 cents USD to buy $1 Canadian dollar, which should make you wonder what the Canadian dollar would like if and when there’s a rebound? There is no printing of money that can bring this market back, what will bring this market back is renegotiation of debt and debt renegotiation equates to a rise in interest rates! If you’re reading this you’ve been warned!
North American stocks fall at the open, loonie dives below 70 cents US | cp24.com
Interesting times ahead!
