Although many market observers believe U.S. dollar bullishness will cool a bit this year, few are willing to overtly call for an outright decline in the greenback. One way of looking at that scenario is that foreign currencies and the related exchange traded funds could suffer further declines against the U.S. dollar.
The Canadian dollar the CurrencyShares Canadian Dollar Trust (NYSEArca: FXC) are already reflecting as much. After ranking as one of the worst-performing developed market currencies last year, the Canadian dollar slumped to its lowest levels in more than 12 years Tuesday, sending FXC to an all-time low in the process.
The Canadian dollar has been suffering as oil, a major export for the economy, declined to 11-year lows. However, SocGen believes that oil-related currencies could recover next year as oil prices rebound. [OPEC Tries to Give Oil ETFs Some Good Cheer]
Some observers have warned of a bubbling real estate sector, and traders have bet against Canadian real estate through shorting Canadian banks. In the meantime, the national median home price continues to climb to all-time highs. We will have to monitor how the government plans to engineer a soft landing for the real estate market in an attempt to mitigate a potential fallout. [Tepid Response by Canada ETFs to Surprise Rate Cut]
“Canada’s gross domestic product can be expected to grow about 1.5 percent in 2016, with 0.5 percent coming from exports and 1 percent from domestic demand, said Douglas Porter, chief economist at Bank of Montreal. That compares with an average forecast of 1.8 percent, according to estimates compiled by Bloomberg,” reports Allison McNeely for Bloomberg.