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Canadian Dollar Most at Risk

When the U.S. Fed begins tapering its quantitative easing program, the Canadian dollar will face more risk than other G-7 currencies.

By Joseph Ciolli, Bloomberg | Updated on December 18, 2013

Canada’s dollar is emerging as the Group of Seven (G-7) currency with the most at stake as traders debate whether the U.S. Federal Reserve will announce a reduction in its unprecedented monetary stimulus as soon as today.

The loonie and U.S. 10-year Treasury note yields are the most inversely correlated since August 2004, increasing faster in 2013 than any other G-7 peer apart from the U.S. dollar. That means any rise in U.S. yields should the Fed taper its $85 billion in monthly bond purchases may weaken Canada’s currency, which is already down 6.8 percent this year.

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