The Big Picture: Loonie Strengthens; Future Unclear
The initial spread of COVID-19 produced world-wide uncertainty. Over a brief period, the pandemic triggered a broad shutdown of many facets of the global economy and the resultant slump in real output was historic. Not surprisingly, investors’ initial reaction to the pandemic was a traditional “flight to quality” as even mildly risky securities were sold off. At the same time, the Canadian dollar was caught up in a broad currency shift, with international investors favouring the “safe-haven” status of the U.S. dollar. With vaccinations proceeding at different rates in different countries, the pace of re-opening and economic recovery is expected to follow a similar disparate pattern. Still, expectations for a material pickup in global economic activity have provided support for commodity prices.
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