{"id":53269,"date":"2024-11-26T15:39:03","date_gmt":"2024-11-26T15:39:03","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2024\/11\/26\/canadian-dollar-has-little-support-until-68-cents-us-david-rosenberg\/"},"modified":"2024-11-26T15:39:03","modified_gmt":"2024-11-26T15:39:03","slug":"canadian-dollar-has-little-support-until-68-cents-us-david-rosenberg","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2024\/11\/26\/canadian-dollar-has-little-support-until-68-cents-us-david-rosenberg\/","title":{"rendered":"Canadian dollar has little support until 68 cents US: David Rosenberg"},"content":{"rendered":"
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The Canadian dollar plunged more than half a cent and fell back below 71 cents U.S. after incoming U.S. president Donald Trump said he will impose a 25 per cent tariff on Canadian and Mexican imports over border and drug issues.<\/p>\n

The loonie fell 1.34 per cent Monday night to 70.52 cents U.S. \u2014 lows not seen since mid-2020 \u2014 after Trump made the comments on his social media platform.<\/p>\n<\/div>\n

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\u201cThis Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!\u201d Trump wrote on Truth Social.<\/p>\n

The Canadian dollar recovered slightly but continued to trade below 71 cents U.S. on Tuesday morning.<\/p>\n

David Rosenberg, the founder of Rosenberg Research and Associates, said the downside risks remain high.<\/p>\n

\u201cThe Canadian dollar, having broken down to C$1.4127 has little technical support now until the C$1.47 mark (68 cents U.S.),\u201d Rosenberg said in a note to clients. \u201cLooking at the chart there is simply nothing but dead air from here to there.\u201d<\/p>\n

Rosenberg added that a falling loonie should not be an obstacle to more Bank of Canada rate cuts, given that businesses are less concerned about inflation than they were a year ago.<\/p>\n

Markets expect the Bank of Canada to continue cutting interest rates \u2014 including a 25 basis-point decrease when it meets Dec. 11 \u2014 putting the bank on a different path than its U.S. counterpart. It is uncertain whether the Fed will cut again this year.<\/p>\n

A higher interest rate will draw more investors to the U.S. dollar. The U.S. dollar index \u2014 a basket of currencies including the loonie measured against the greenback \u2014 is up 3.23 per cent since Nov. 5.<\/p>\n<\/div>\n

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Some, however, think the loonie is overreacting to the tariff threat.<\/p>\n

\u201cWe suspect these moves will ultimately look overdone, with the cold commercial logic of international trade and domestic price pressures prevailing in reducing the tariff burden that actually reaches implementation,\u201d said Karl Schamotta, chief market strategist of Corpay Currency Research, in a note to clients Monday night.<\/p>\n

Schamotta said the tariffs could hit a number of \u201cstrategic\u201d U.S. industries, swell taxes by US$272 billion, inflate the prices of goods, boost interest rates and hurt consumers.<\/p>\n

\u201cBut for now, markets are likely to take shelter, with participants hedging themselves against further uncertainty. Volatility expectations are \u2014 quite justifiably \u2014 ratcheting higher across most major currency pairs, helping to boost the dollar in relative terms,\u201d Schamotta said.<\/p>\n

In a note this morning, Schamotta said that a 70 cents U.S. Canadian dollar is \u201cin scope before year end.\u201d<\/p>\n

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