Seeking Alpha

Shorting loonie is Goldman's next 2014 idea

  • "Significant external imbalances have built up in the Canadian economy," says Goldman, recommending a short of the loonie (vs. the greenback) as its 2014 trade idea #3 (earlier ideas are here). The current account - in surplus prior to the financial crisis - has consistently been in deficit since by about 3% since, thanks to a big decline in manufacturing exports.
  • Energy has been unable to pick up the slack as boosted crude production from the tar sands of Alberta has been offset by the decline in value of natural gas exports.
  • Previously easy funding of the current account deficit changed for the worse in 2013, says Goldman, noting capital inflows have slowed rapidly over the past few quarters. One key reason: Emerging market central banks are no longer diversifying their forex holdings as quickly as before.
  • Canadian ETFs: EWC, CAD, CNDA, FCAN, EWCS
  • The loonie: FXC
Comments (1)
  • SharkDude
    , contributor
    Comments (683) | Send Message
     
    we are the one's debasing our currency not them. why would theirs go down. horrible call
    27 Nov 2013, 01:04 PM Reply Like
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