Canada ETF Back on Track with Economy Recovering | ETF Trends

With the energy shock abating, Canada’s economy is on the mend and the country-specific exchange traded fund is now trading back above its long-term trend.

The iShares MSCI Canada ETF (NYSEArca: EWC) increased 8.2% over the past month and is hovering above its 200-day simple moving average.

Additionally, the First Trust Canada AlphaDEX Fund (NYSEArca: FCAN), which employs growth and value screens to select holdings, gained 8.7% over the past month while the recently launched, SPDR MSCI Canada Quality Mix ETF (NYSEArca: QCAN), which includes value, quality and low volatility screens, rose 7.5%.

Bank of Canada Governor Stephen Poloz argues that the economy is recovering from the oil swing and discouraged speculation of any need for further interest rate cuts to prop up the market, reports Greg Quinn for Bloomberg.

Policy makers surprised observers at the start of the year with a 25 basis point cut to the benchmark rates in an attempt to diminish the impact of falling oil prices. [Tepid Response by Canada ETFs to Surprise Rate Cut]

Looking ahead, the central bank projects the Canadian economy to quicken to a 1.8% annualized growth rate this quarter and to 2.8% in the third quarter. Poloz also anticipates that the economy will return to full capacity at the end of next year. [Rising Oil Could Provide Solid Footing for Canada ETFs]

“If you are expecting stronger growth in the second quarter and in the second half, then it would appear you don’t need to cut rates again,” John Clinkard, chief economist at Deutsche Bank Canada, said in the article.