The CAD/USD break out is finally back. It is one of the more important news events of the last week, and the price is beginning to take a dive.
It will be very difficult for the USD to get back to par with the Canadian dollar at the current rates. A new price analysis is the first order of business. The movement is slow, but it does seem to be picking up some speed.
It is good to know the outlook, but it is also good to find out how far is this going to go. Since a recovery is underway, we are going to look at the reasons why this happens.
Here is what I believe to be the main reason for the downturn in the outlook. We have seen historically huge drops in oil prices. When this happens, the demand for goods and services drops dramatically. This is very good for the USD, because the currency goes down.
The drop in oil prices makes everything that is made of soft commodities very cheap. This makes them a good investment. But when the food production is affected, everyone suffers.
In addition, the sudden drop in oil is causing the supply/demand curve to change. This is going to affect the consumer prices, which are what affects inflation in the economy.
The drop in oil prices is affecting the income of most Americans, and since they spend the majority of their income on consumer prices, they are going to be hurt by it. This is not good for the economy, and it makes things worse for a country.
The next issue is inflation. This is because many Americans are using their dollars to purchase food and other goods. This makes their money worth less, and therefore makes the currency weaker.
Now, we are in tough economic times. Many businesses cannot pay their bills. There is so much debt out there, and it is really a chaotic situation.
The only way for the currency to recover is to make more people’s life easier. We are seeing this across the board in the economy.
For this reason, the CAD/USD rate is down. But I do think the currency will rebound at some point. But before it does, it will need to make things a little bit better.
There is still time for the price to move lower, but it is going to need to do it after a significant recovery. The dollar will need to start moving above par. That could happen any day now.