Years of near universal easy money policies led to an investment boom
in commodities, which led to overproduction that coincided with languid
demand, which led to a crash in prices, which led to a rout in
commodity currencies. Then the Fed started its cacophony about raising
rates; it pulled hot money into dollar assets, pushed up the dollar
further, and left commodity currencies twisting in the wind.
Among them, one stands out: the Canadian dollar.
The rout in commodities has ravaged Canada’s oil patch and its mining
sector. For example, home sales in Calgary, the epicenter of the oil
patch, have plunged 25% year-to-date. Canada is in one of the most
magnificent housing bubbles the world as ever seen, and when it pops in
Toronto or Vancouver, there will be fireworks. But not yet.
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