Canadian dollar rally looks overdone

The recent surge in the Canadian dollar coincides neatly with the general rally in equity and commodity markets. The economic fundamentals that would typically justify this movement, however, are lacking. The latest survey evidence suggests that the global economic recovery has lost even more momentum, which prompted a drop back in crude oil prices last week. Closer to home, the most recent evidence suggests that Canada's housing market has now entered what could be a quite severe correction, with both sales and prices tumbling in August.