CANADIAN DOLLAR TO STAY WEAK

Back when the Canadian dollar was at parity with the us$, I jumped into the opportunity to purchase as many quality American dividend paying stocks, because I knew my total return would get a boost from Us$ appreciation once the price of oil will sober up to normal levels like it is today. That’s one of the reason why I am averaging 20% annualized return for the last 4 years.

Two Major reasons will most likely keep the Canadian $ weak vs Us$.

Canadians debt level has never been greater than today : see chart below in % of income. So the chance of the Bank of Canada doing any meaningful tightening of the base interest rate is rather unlikely.

canada-households-debt-to-income

 

Secondly Oil prices will most likely remain low for a while because available output is outpacing demand by a wide margin

https://retireviadividends.com/2017/02/23/no-big-expectations-for-oil-stocks/

You also see that historically it’s rare that oil prices remain high for a long time. It’s usually related to temporary geopolitical crisis.

oil-prices

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