Source: CANSIM Table 176-0064 & Bank of Canada

Much attention has recently been paid to the falling value of the Canadian dollar (CAD). Rightfully so: as of yesterday, the value of our dollar versus the US dollar (USD) sat at just under 70 cents (69.6, to be precise). This was the lowest it had been since April 2003, having fallen by 9% in 2016 alone, and 16% since the beginning of 2015. It seems like only yesterday that the CAD was trading above par against the USD; in fact, it was last in January 2013, when the CAD-USD exchange rate was $1.01, not far off the peak of $1.04 from April 2011.

With the Bank of Canada having dropped the overnight target interest rate by 50 basis points over the past year, and the US Federal Reserve having recently increased the federal funds rate by 25 basis points (the first time it has increased in 8 years), it's not surprising that there has recently been downward pressure on the CAD. The question is: has the CAD bottomed-out, or is there room to fall further? According to Macquarie bank, it may fall as low as 59 cents by the end of 2016. If this seems far-fetched, consider that the Bank of Canada has its next rate meeting next week, and it is now widely expected that Stephen Poloz et al will cut the overnight rate by a further 25 basis points, thereby depressing the CAD from its current level.