Canadian Dollar Gains Against the U.S. Greenback

In the last four days, the Canadian dollar has gained over two cents compared to the U.S. dollar. Canadian exporters won't be happy with this gain but companies settling in U.S. funds for purchases will enjoy a bit of a foreign currency gain due to the increase. The increase has been due to higher commodity prices mainly in gold and oil. Since these two commodities are key Canadian resources, our dollar tends to be linked to their value. The value of these commodities are being spurred by actions from the U.S. Federal Reserve and the Bank of Canada who are both buying up Treasury bonds to increase reserves thereby creating a pool of money to fund growth and recession fighting measures. Experts believe that such an act may spur sudden growth and a return to inflation. As a result, investors are moving to commodity items to guard against the effects of inflation since these items will be in demand and act as a hedge against inflation. As a result, keep your eye on the price of gold and oil to see where the Canadian dollar will head. Unfortunately, the roller coaster ride is not over yet.