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Investing.com -- The Canadian dollar is currently facing its worst fundamentals since April 2016, as per the FX scorecard model. This is the first time in nearly five years that the Canadian currency has found itself in such a predicament.
The long-term currency biases have seen some changes. The Philippine peso (PHP) continues to hold a bullish bias. However, the Australian dollar (AUD) and the Canadian dollar (CAD) have shifted to a bearish bias. Meanwhile, the Swiss franc (CHF), Japanese yen (JPY), and Euro (EUR) have maintained their bearish biases.
Canada’s labor market was already in a weak state even before the country’s trade relations with the United States took a hit. Following this, Canada’s economic outlook has seen a significant decline. This situation is further complicated by the fact that Canada carries a substantial debt burden, which offers relatively small real yields.
Furthermore, the terms-of-trade dynamics for the country have been unfavorable this year. This refers to the ratio at which Canada can trade domestic goods for imported goods, an important factor in the economic health of a nation. This year, these dynamics have not been in Canada’s favor, contributing to the bearish bias for the Canadian dollar.
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