The Canadian dollar is catching a bid.
And while the CAD rarely grabs headlines like the euro, pound, or yen, it’s no backbencher—it makes up 9% of the US Dollar Index $DXY, just behind the big three.
It flies under the radar of most investors, and I think that’s a big mistake.
Here’s why.
After years of sliding, the CAD/USD rallied off a major level of support near 0.68—a level that’s marked key turning points in both the currency and Canadian stocks for over a decade.
This bounce looks small now, but it matters.
We’ve talked a lot about how EM currencies tend to drive their respective stock markets. When a “peso” rallies, local equities tend to follow. That effect is stronger in emerging markets because of the heavier reliance on USD funding and the volatility of the currencies there.
Canada, on the other hand, has deep, liquid capital markets, a resource-heavy economy, and two major stock...