The reason to sell the Canadian dollar isn't retail sales or the BOC decision via ForexLive

USD/CAD is rebounding from a puzzling decline following the Bank of Canada decision; earlier in the day retail sales boosted the pair. Those are both short-term stories. What will lead to a large and more sustained drop in the Canadian dollar (boost in USD/CAD) is the ineptitude of the government in managing energy resources.

It's not just the inability to get Keystone XL approved or develop refining and export capacity rather than selling oil far cheaper than world benchmarks because of a single export market (the US). It's the latest failure: losing the liquified natural gas race.

I've ranted about this before and now it's clear that Canada is in desperation mode because today British Colombia lowered its proposed tax rate on LNG export projects. Canada has 13 proposed LNG projects on the West coast and bureaucrats have dragged their tails approving them — for years in some cases.

Had Canada had any plan or leadership, many of those projects would already be under construction with billions of dollars flowing into the country. Instead, Canada has allowed the US to catch up. Here's what Petronas has to say last month:

Petronas, Malaysia's state-owned oil and gas group, warned that new taxes in BC would threaten the viability of its proposed $10bn liquefied natural gas project in Kitimat, BC. Shamsul Abbas, Petronas chief executive, told the Financial Times in September that Canada was “already 40 years behind in the game” and that its biggest buyer of gas – the US – was now not only its biggest competitor but also “leading Canada by a far stretch”.

It was only in May 2013 that Obama approved the first US export permits for LNG.

In the short-term many factors beyond a country's control determine whether a currency rises or falls but in the long term it's stories like this that matter.

posted via ForexLive