Canadian dollar ‘big winner’ with more quantitative easing

Jonathan Ratner, National Post,

If the Fed pursues another round of quantitative easing, the Canadian dollar may be the big winner. The loonie has tended to perform fairly well following previous QE episodes, according to Barclays strategist Paul Robinson.

“In our view, this is likely to be the case once again, but the larger the monetary stimulus the more that it may benefit,” he said in a report.

If this is done relatively soon and in relatively large size, Mr. Robinson believes QE could produce a more positive response this time around, particularly given the success authorities had in limiting the severity of the recession in 2008-2009.

“The more successful QE is deemed to be, the lower U.S. interest rates will be, the higher the inflationary pressures around the world and the more growth will be supported,” the strategist said. “Canada seems to be perfectly placed to benefit from all of these factors.” (more)