Bank of America Predicts False Canadian Boost
Bank of America predicts an exaggerated boost for the Canadian dollar Friday morning, according to Bloomberg.
Although Bank of America expects the Canadian dollar to weaken, depreciating against the dollar to C$1.03 by the end of the year, the bank expects a strong rally tomorrow as the market has thus far failed to factor in Canadian inflation numbers. The Canadian government is set to announce the numbers Friday morning.
Bank of America strategist John Shin characterized the nation as being "richly valued." He expects the Canadian dollar to ultimately weaken as oil prices decline to $88 a barrel later this year.
As Canada is a major exporter of raw materials, weakness in commodity prices could have an adverse effect on the country's currency. The Canadian dollar has rallied over the past year as commodity prices have increased.
Traders inclined to believe Bank of America's prediction might wish to consider CurrencyShares Canadian Dollar Trust (NYSE: FXC). FXC attempts to correspond to the value of the Canadian dollar and has increased in value over the past year as the Canadian dollar has strengthened against other currencies.
