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“God Save The Canadian Dollar”

Canadian Dollar

The Canadian Dollar has fallen 23% against the US Dollar since Valentine’s Day of 2013. Is the worst over? Or is there more pain to come?

The Bull Case

There are a few reasons why the CAD might rise:

  • The Fed does not hike rates in 2015.
  • The US economy decelerates faster than Canada’s does.

Regardless, the short thesis is more convincing…

The Bear Case

To Hike Or Not To Hike?

The market is pricing in a rate hike in just over 5 months:

As a result, near-dated yields are rising…

The Yield Curve

The Treasury yield curve is flatter than it was about a year ago:

The short-end is convinced that the Fed will move in 2015…

…The long-end is worried about slowing growth and...