Expert: Steven Taylor - 12/3/2011

Question
Dear Mr. Taylor,

Can you give me your professional opinion as to whether you think the Canadian dollar will continue to move higher against the greenback or not in the near term.

Thank you.
Germain

Answer
This is a difficult call, because I believe the recent rise in the Canadian dollar is related to the ongoing European debt crisis. As investors flee the uncertainty in Europe, they have been moving towards more solid assets, such as the Canadian dollar. The recent rebound in commodity prices has not hurt, either.

Overall, I would be surprised to see the large recent increases continue, but I don't really see the dollar giving back all of its recent rise, either. Although I think the strength is probably here for the short-term, but I doubt it will continue to rise at the same rate. But, since the situation in Europe is so fluid and changes daily (if not by the hour), this really is unchartered waters, and almost anything can happen.