Our limping loonie shows the bullish narrative on the economy is breaking down

The loonie has fallen nearly 6.5 per cent against the U.S. dollar from its February high, is down nearly 8 per cent from its September 2017 high and is down more than 4 per cent this year.National Post

Last year’s strong Canadian economic growth figures set off a lot of flag waving by media pundits, economists and market strategists, who spun bullish narratives about the state of the economy and a hawkish view of the Bank of Canada’s intentions.

However, the latest action by the Canadian dollar and our main equity market suggest that investors, rather than being backward looking, are increasingly concerned about what lies ahead.

The loonie has fallen nearly 6.5 per cent against the U.S. dollar from its February high, is down nearly 8 per cent from its September 2017 high and is down more than 4 per cent this year. The S&P TSX isn’t faring much better — it was down nearly 8 per cent for the year in early February, but has since recovered about half of those losses.

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