Just as it did in November of last year, Canadian Dollar (CAD) is expected to do well in the next few months. The Canadian dollar has been rising over the past several months due to several factors including rising crude oil prices, political stability, and consumer confidence.
While these factors may be causing some analysts to look ahead to the rise in the Canadian dollar, many also believe that OPEC’s decision to cut oil production will cause the currency to rise again.
Why does OPEC cut production? As mentioned above, the recent increases in the prices of both oil and natural gas have led many countries around the world to curtail their own production levels. Of course, Saudi Arabia is not the only country to cut production since several other countries have done so. This has caused the oil price to remain relatively low throughout much of the world, and this means that Canada has not had to cut back on its own production.
This leaves OPEC, which is made up of many of the world’s largest oil producers, as the most influential political and economic forces to be seen in Canada. And with many investors predicting that OPEC will reduce production, it is only natural for the Canadian dollar to rise.
Canadian dollar should remain strong thanks to the Canadian economy expected to grow at a good pace over the next few years. While many analysts are predicting a decline in the Canadian dollar in the coming months, it may not remain as strong as it did in the past few months.
At this point, it is hard to know exactly how the Canadian economy will fare over the next several years. As mentioned above, many countries around the world have reduced their production levels.
The most notable amongst them is Saudi Arabia, who has seen an increase in oil prices and has been reducing production levels. Although not everyone expects Saudi Arabia to reduce production levels, this has certainly led to a notable drop in the Canadian dollar.
It is also not certain that the Canadian economy will continue to grow as fast as it has in the past few years. With many governments cutting back on infrastructure spending, the government’s ability to fund itself may diminish.
As such, another reason for the Canadian dollar to rise is that many of the economies of developed countries around the world are experiencing similar economic problems. In fact, many are suffering from similar conditions as the United States, particularly with regards to government funding and balance of trade deficits.
The dollar is generally considered to be strong when oil prices are high, as this represents an opportunity for countries around the world to reduce or eliminate their own oil exports. Unfortunately, as prices begin to drop, many countries are slashing or eliminating their oil exports in order to avoid being forced to cut back.
As this happens, many countries’ currencies will drop as they adjust to the lower oil prices. In the process, they may also lose much of their purchasing power, which will in turn send their currencies into severe decline.
As such, at this time, the Canadian dollar is set to remain strong as long as oil prices remain relatively low. Perhaps the market will once again pull back somewhat as we head towards next year’s winter.
Since so many factors are affecting the Canadian economy, it is hard to say whether or not this trend will continue. However, given the large number of central banks around the world seeing their currencies drop over the past several months, the Canadian dollar seems to be doing rather well.