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The Bank of Japan’s attempt to withdraw policy accommodation is understandable but misguided. Monetary weakness suggests that the economy is on course to return to deflation.

The BoJ’s difficulties stem from the inflationary policy mistake of the Fed and other G7 central banks in 2020-21. Subsequent tightening to correct this error works partly by boosting currencies to export inflation to – and import disinflation from – countries with responsible policy-making, including Japan.

What about Japan’s home-grown inflation? This was minor and is fading fast. Annual broad money growth peaked in 2020-21 at 8.1% in Japan versus 24.5%, 12.5% and 16.0% in the US, Eurozone and UK respectively. Japanese growth was back at its pre-pandemic (i.e. 2010-19) average by end-2022.

A bumper 5.08% pay award in the spring Shunto is an echo of an inflation pick-up driven mainly by a weakening yen. Most workers are non-unionised / employed by SMEs and will receive smaller increases. Falling inflation, slowing profits and a softening labour market suggest a much lower award next year.

The latest money numbers are ominous. Broad money M3 fell by 0.1% in both April and May, following the BoJ’s removal of negative rates in March. May weakness was driven by f/x intervention– record yen-buying of ¥9.8 trillion last month equates to 0.6% of M3.

Annual M3 growth slumped to 1.3% in May, the lowest since the GFC and half the 2010-19 average, suggesting a fall in annual nominal GDP growth below its respective average of 1.2% – see chart 1.

Chart 1

The BoJ, meanwhile, had moved towards QT before the June MPC announcement of a reduction in JGB purchases from July, with gross buying in May well below the run-rate of redemptions – chart 2.

Chart 2

Monetary weakness contrasts with respectable bank lending expansion – commercial bank loans and leases rose by an annual 3.0% in May. The contribution to money growth, however, has been offset by a combination of increased non-deposit funding, reduced BoJ JGB buying and, in May, a fall in net external assets due to f/x intervention – chart 3*.

Chart 3

What should the BoJ do? A monetarist purist would argue for reversing policy tightening and accepting the currency consequences. Likely further yen weakness, however, would prolong current high inflation – a significant cost to balance against the benefit of avoiding a medium-term return to deflation.

The least bad option may be to signal tightening but delay meaningful action in the hope that a dovish Fed shift will lift pressure off the currency soon. This could be a reasonable description of the BoJ’s recent behaviour.

*Note: the counterparts analysis is available through April.

Next time you experience an internet outage, don’t blame the weather. Blame the thieves who took a big bite out of your internet line instead. According to Bloomberg, telecom companies are sitting on 800,000 tonnes of copper worth $7 billion at today’s prices in the form of old copper wiring. A surge in copper thefts is usually correlated with two things: a rise in copper prices and a rise in unemployment. We have seen a clear upward trend with the former and copper thefts could be a leading indicator of the latter.

There is a good chance we will be hearing more on cable-cutting thievery in the future. Copper traded around $3.89 per pound at the beginning of the year and recently crossed $5 per pound. So, what is going on with the price of copper?

Net zero targets come at a cost

First, it’s important to understand why copper is so central to our lives. Apart from silver, it’s the most efficient conductor of electricity. Copper is everywhere, from small appliances like toasters, to cars, which have an average of 29 kilograms of copper built into them. Electric cars need at least double the copper.

To meet ambitious net zero targets, it’s not just about electrifying means of transport. It also means generating and sourcing clean energy from far-flung wind farms and solar parks that need millions more feet of copper wiring to connect greater distances. According to S&P Global, annual copper demand is expected to double to 50 million tonnes by 2035 to achieve net zero targets.

Power-hungry AI search

Your Google search consumes around 0.0003 kilowatt-hours of energy. Ask the same question on, say, ChatGPT4 and energy consumption jumps to 0.01 kilowatt-hours. That’s around 15 times more energy consumption. Extrapolate this to the exponential growth in AI searches we see on the horizon (ChatGPT had 100 million monthly active users at the end of 2023) and you get the scale of energy required to sustain this trend. According to Trafigura, copper demand related to AI and data centres could add up to a million tonnes by 2030. That’s on top of the expected four to five million tonne deficit gap expected for reasons other than AI.

Structural deficits

While demand could explode on the back of AI and ambitious net zero goals, supply is not expected to keep pace for two reasons. First, the 10 biggest copper mines are around 95 years old on average. With every passing year, it gets more expensive to go deeper into the ground to extract lower grades of ore. Most of the big mines are located in Chile and Peru, politically volatile jurisdictions with recurring water shortages. That leaves existing mines producing a dwindling supply of expensive copper.

When it comes to new mines, there is not much incentive to put dollars to work on known deposits. Copper prices would need to be much higher to incentivize mining companies to invest billions of dollars. With politics, red tape and tougher environmental regulations, it takes close to a decade to fully operationalize a mine. This explains the flurry of activity in recent months (Glencore & Teck, Newmont & NewCrest, BHP & Anglo) to buy and consolidate existing mining assets. However, without exploration for new assets, it’s unlikely this will make a dent in the current demand-supply equation. The last copper mega deposit was found in Southern Mongolia (Oyu Tolgoi mine) 20 years ago. After pouring $7 billion into it, it has yet to reach peak production.

One of our holdings is Capstone Copper (CS CN), a mid-tier copper producer with mines in Chile, Mexico and Arizona. Capstone’s growth is driven by its assets in Chile, which make up two thirds of its net asset value. As a mid-tier producer, Capstone is not blessed with scale or the most unique grade of ore. However, what we like about the company is its ability to find and manage high IRR assets stewarded by a CEO with over 30 years of experience in the mining space.

In 2023, the company produced 164 kilotonnes of copper; however, the ramp up of its two Chilean mines is projected to bring production to 350 kilotonnes by 2028. This production increase means cash costs could come down from $2.88 per pound today to $1.50 per pound in the future. Should copper prices remain elevated, this would make for a very profitable operation.

Twenty years ago, copper saw a five-time increase in price driven by underinvestment in the 90s and China’s rapid industrialization. Could the simultaneous confluence of AI, the green energy transition and supply shortages make history repeat itself?

Previous posts suggested that a recovery in US money growth would stall in Q2 / Q3 as Fed QT was no longer offset by monetary deficit financing (at least temporarily).

The broad M2+ measure – which adds large time deposits at commercial banks and institutional money funds to published M2 – fell by 0.1% in April, with available weekly data suggesting marginal growth in May.

Unexpectedly, however, the narrow M1A measure tracked here – comprising currency in circulation and demand deposits – rose by a bumper 1.8% in April. This follows a 1.3% gain in March – see chart 1.

Chart 1

Positive narrow money divergence typically occurs when rates are falling. Lower rates encourage a shift of money holdings from time deposits and savings accounts to demand deposits and cash. Such a shift is usually a signal of rising spending intentions.

Are money-holders front-running rate cuts? The narrow money pick-up is a hopeful signal but there is a risk that it goes into reverse if the Fed continues to delay.

The impact of the US April rise on the global aggregate calculated here was offset by a large monthly drop in Chinese narrow money, as measured by “true M1”, which corrects for the omission of household demand deposits from official M1.

So the six-month rate of change of global real narrow money was little changed in April, following a move back into positive territory in March – see prior post for more discussion.

US six-month momentum moved to the top of the ranking across major economies in April, while China returned to negative territory – chart 2.

Chart 2

Falling interest rates suggest that the Chinese relapse will prove temporary – chart 3 – but the signal for near-term economic prospects is negative.

Chart 3

Eurozone / UK real narrow money momentum continued to recover in April but remains negative. The current UK lead may prove temporary unless the MPC follows the ECB in cutting rates soon.

The Chinese relapse resulted in E7 real money momentum falling back in April, while G7 momentum crossed into positive territory – chart 4.

Chart 4

The still-positive E7 / G7 gap coupled with a recent cross-over of global six-month real narrow money momentum above industrial output momentum could signal improving prospects for EM equities. The MSCI EM index outperformed MSCI World by 10.5% pa on average historically under these conditions.

G7 annual broad money growth recovered further in April but, at 2.8%, remains well below a 2015-19 average of 4.5% – chart 5.

Chart 5

The roughly two-year leading relationship suggests that annual inflation will bottom out in H1 2025 but remain at a low level into H1 2026.

As we approach the start of summer, the need for cooling adds additional pressure to the grid, especially at peak hours. The Electricity Reliability Council of Texas (ERCOT) recently warned that reserve margins will be squeezed as temperatures are expected to rise. Last year, ERCOT asked customers multiple times throughout the summer to reduce their power consumption to limit the risks of blackouts. Many other states across the US face similar situations, and there are ways for individuals and corporations to alleviate the stress of heightened energy demand on the grid, namely through energy efficiency retrofits. Energy efficiency is often referred to as the low-hanging fruit of the energy transition and is a theme we are paying attention to.

The role of energy efficiency

Energy efficiency is the act of using less energy to perform the same function, such as heating a home or running a dishwasher. Reducing energy demand not only allows the grid to run more smoothly but also enables cost savings for consumers. To promote the quicker adoption of energy efficiency retrofits, the US has been taking both a carrot and stick approach through incentives along with regulations. To date, there are over 1,072 rebate programs in place in the US for both individuals and corporations to take advantage of. Over the next few years, it is expected that the investment in energy-efficient buildings and initiatives will double, providing many interesting investment opportunities.

HVAC: A major energy savings opportunity

One way that we are exposed to the energy efficiency theme is through commercial and industrial HVAC (heating, ventilation and air conditioning) solutions and equipment. Within a home or a building, heating and cooling uses the most energy. Typically, by upgrading equipment to state-of-the-art models, energy savings can be anywhere from 20% to 50%. Every year in the US, over $14 billion is spent on HVAC equipment either through new installations or repair and replacement. In April 2024, the Department of Energy (DOE) announced four consensus-based efficiency standards that are expected to save Americans billions on utility bills. A recent addition to the portfolio is poised to benefit from the stricter standards.

AAON’s commitment to innovation

While decarbonization and energy transition are secular trends that have gained popularity in the last few years, our holding AAON (AAON US) has been delivering HVAC equipment since 1988. Since then, AAON has focused on providing commercial and industrial customers with the highest quality equipment, saving them both energy and dollars. As the DOE released updated guidance on spec requirements for HVAC equipment, AAON was not required to update any of its equipment as it already met all the minimum requirements. Innovation and R&D have always been at the heart of company, which have led it to develop some of the most efficient and best-performing equipment on the market. Compared to peers, AAON spends the highest percentage as a proportion of sales on R&D, which we believe is an important piece of the company’s competitive advantage.

Efficiency today, savings tomorrow

Investing in energy efficiency brings multiple benefits. By adopting HVAC solutions and other retrofits, we can reduce the strain on the grid, lower costs and contribute to a more sustainable future. We believe making these changes now can lead to long-term gains for both individuals and businesses.

Global (i.e., G7 plus E7) six-month real narrow money momentum returned to positive territory in March, consolidating in April. It has also crossed above six-month industrial output momentum, turning one measure of global “excess” money positive – see chart 1.

Chart 1

Should investors, therefore, adopt a positive view of economic and market prospects? The judgement here is no – or at least, not yet.

Six-month real narrow money momentum bottomed in September 2023 and lows have preceded those in industrial output momentum by between four and 14 months so far this century. This suggests that a recent decline in output momentum will bottom out by December.

The lag may be at the top end of the range on this occasion, for three reasons.

First, lags tend to be longer when real money momentum reaches extremes, and the September reading was the weakest since 1980.

Secondly, the real money stock is below its long-run trend relationship with industrial output – chart 2. A prior overshoot cushioned the impact of a negative rate of change in 2022-23; the reverse effect could apply in 2024-25.

Chart 2

Thirdly, prior recoveries in real money momentum from negative to positive were followed by a recovery in output momentum always in the context of a positively-sloped yield curve (10-year government bond yield minus three-month money rate) – chart 3. The curve is still inverted.

Chart 3

The recovery in real narrow money momentum is a hopeful signal for H1 2025 but there remains a risk of surprisingly negative economic data over the next six months. A pessimistic bias will be maintained until real money momentum returns to its long-run average and the yield curve disinverts.

The cross-over of real money momentum above industrial output momentum is similarly judged to be a necessary but not sufficient condition to adopt a positive view of market prospects.

Global equities have outperformed cash on average historically only when a positive real money / industrial output momentum gap partly reflected above-average real money expansion (measured as a 12-month rate of change). The latter condition is unlikely to fall into place before late 2024 at the earliest.

The current combination was associated with mixed equity market performance with some notably bad periods, e.g. mid-2001 and late 2008 / early 2009 – chart 4.

Chart 4

Banyan Capital Partners (“Banyan”), a leading Canadian middle-market private equity firm, is pleased to announce its acquisition of Stagevision Inc. (“Stagevision” or the “Company”). Stagevision marks Banyan’s third platform investment through Banyan Committed Capital LP, an evergreen investment vehicle established in December 2021.

Founded in 1984, Stagevision is one of the largest Canadian-owned providers of audiovisual, staging and event management services for live, virtual and hybrid events. While headquartered in Mississauga, Ontario, the Company maintains a well-recognized customer base in both Canada and the United States.

Banyan is partnering with the Company’s CEO, Scott Tomlinson, who has served in this role since 2021. As part of the investment, Scott and the management team will acquire a minority ownership in the Company.

“We are thrilled to be partnering with Banyan Capital Partners. This partnership represents a significant milestone in our company’s history and Banyan’s dedication to a long-term investment philosophy aligns with our objectives to continue to grow our business throughout North America,” said Scott Tomlinson, CEO of Stagevision.

“Our partnership with Stagevision underscores the exceptional business it has built on the foundation of quality service and technical expertise. Banyan is excited to partner with Scott and his team as they enter a new phase of growth,” said Matthew Segal, Managing Director and Partner at Banyan Capital Partners.

About Stagevision

Founded in 1984, Stagevision provides a range of services in professional audiovisual production and management, including the assembly of sets and soft good products, short-term rental of audiovisual equipment, and simultaneous interpretation services to businesses and related agencies across both Canada and the United States.

About Banyan Capital Partners

Founded in 1998, Banyan Capital Partners is a leading Canadian private equity firm investing in middle-market companies throughout North America. Banyan’s long-term investment approach and successful track record in providing full or partial liquidity to founders, families and entrepreneurs helps take businesses to the next level. For more information, please visit banyancapitalpartners.com.

Banyan is part of Connor, Clark & Lunn Financial Group Ltd., an independent , employee-owned, multi-boutique asset management firm with over 40 years of history and offices across Canada and in the US, the UK and India. Collectively managing over C$127 billion in assets, CC&L Financial Group and its affiliate firms offer a diverse range of traditional and alternative investment products and solutions to institutional, high-net-worth and retail clients. For more information, please visit cclgroup.com.

The MPC’s forecast in November was that annual CPI inflation would average 3.5% in Q2 2024 (November 2023 Monetary Policy Report (MPR), modal forecast assuming unchanged 5.25% rates). April’s drop to 2.3%, therefore, might be considered cause for celebration.

The negative market response reflected stronger-than-expected services price inflation, with the Bank of England’s “supercore” index rising by an annual 5.7%, a disappointingly small drop from 5.8% in March. This measure strips out “volatile and idiosyncratic” components, namely rents, package holidays, education and air fares.

The MPC has encouraged a focus on services inflation, citing it as one of three key gauges of “domestic inflationary persistence”, along with labour market tightness and wage growth. This prioritisation, however, is questionable, as there is no evidence that supercore leads other inflation components, whereas those components appear to contain leading information for supercore.

Chart 1 shows annual rates of change of three CPI sub-indices: supercore services (34% weight); other components of the core CPI index, i.e. core goods and non-supercore services (43%); and energy, food, alcohol and tobacco (22%).

Chart 1

Correlation analysis of this history suggests that supercore follows the other two series: correlation coefficients are maximised by applying a five-month lag on the other core components measure and a four-month lag on energy / food inflation.

Granger-causality tests show that inflation rates of the other core components sub-index and energy / food are individually significant for forecasting supercore. By contrast, supercore terms are insignificant in forecasting equations for the other two sub-indices*.

These results admittedly are strongly influenced by post-2019 data: supercore lagged the inflation upswing and peaked later than the other components.

A notable finding is that supercore inflation has been more sensitive to changes in energy / food prices that the rest of the core index, conflicting with the notion that it is a purer gauge of domestic inflationary pressure. This is partly explained by the one-third weight of catering services in the supercore basket: the associated price index is strongly correlated with food prices.

A forecasting equation for supercore including both other sub-indices predicts a fall in annual inflation to 4.7% in July.

The latest MPR claims that monetary trends are of limited use for inflation forecasting over policy-relevant horizons. Lagged terms in broad money growth, however, are significant when added to the above forecasting equation. The July prediction is lowered to 4.5% with this addition.

A fall in annual supercore inflation to 4.7% in July would imply a dramatic slowdown in the three-month annualised rate of change (own seasonal adjustment), from over 6% in April to below 3%.

A “monetarist” view is that aggregate inflation trends reflect prior monetary conditions, with the distribution among components determined by relative demand / supply considerations. From this perspective, supercore strength is partly the counterpart of weakness in the other sub-indices. Headline CPI momentum continues to track the profile of broad money growth two years ago, a relationship suggesting a further easing of aggregate inflationary pressure into H1 2025 – chart 2.

Chart 2

*The regressions are based on 12-month rates of change and include lags 3, 6, 9 and 12 of the dependent and independent variables.

It’s springtime and, although most Global Alpha employees are close to putting Q1 earnings season behind them, some of us are getting ready to start dealing with allergy season. Trying to make the most of our situation, we tried to see if we could profit from this annual annoyance.

What’s the problem with allergies?

For most people who suffer from allergies, this only implies a runny nose and watery eyes, but it also impacts millions of people more significantly through sleepless nights, shortness of breath and asthma. A recent European survey found that 80% of respondents suffering from allergies mentioned the condition affecting their daily activities considerably. Additionally, untreated or poorly treated allergies can lead to serious health complications.

The ramifications of allergies are amplified by the fact that it affects children disproportionately, impacting sleep schedules and consequently school performance. Multiple studies have found that children who are allergic to pollen can see their grades drop an entire level if their condition strikes during exams. There is also a clear, although not properly explained, positive correlation between higher GDP per capita and the proportion of population with some form of allergy. This suggests that its effects on society are likely to get worse over time if nothing is done to address it.

Allergies as an investment opportunity

Given all this, it makes sense why allergy treatment is getting more attention and resources from pharmaceutical companies. The global allergy treatment market was $20.8 billion in 2022, with expectations to reach $38.9 billion in 2032. The Asia-Pacific region is expected to experience the fastest growth given its quickly growing middle class and increasing awareness of treatment options.

According to the WHO, allergies are now the fourth-largest pathological condition after cancer, AIDS and cardiovascular diseases. Over 500 million people globally have some form of allergy, with the majority self-treating with over-the-counter medicine without seeing a medical professional. This has driven massive investments in allergy treatments among virtually every major pharma company.

Curing allergies with a simple tablet?

In comes one of our holdings: ALK-Abello (ALKB DC). It is the world’s largest provider of allergy immunotherapy solutions with more than 35% market share. It provides its products in three different formats: injections, sublingual drops and tablets (the latest addition to the product line and largest opportunity). Most of its revenue is from Europe, with the rest coming more or less evenly from North America and APAC. Its market share in Japan is 97%, but adoption has yet to catchup to Europe standards.

Immunotherapy is one of the most exciting treatment methods for allergies, as it attempts to rebalance the immune system to avoid triggering the undesired reaction and thus provides a more permanent solution than alternatives. ALK’s products treat the five most common respiratory allergies (dust mites, grass, trees, ragweed, Japanese cedar), which together account for close to 80% of allergy cases in the world. The company differentiates itself from peers with its unique clinical data sets that not only assist in developing new products, but also help increase penetration by providing evidence-based insights to prospects and customers.

Where will the growth come from?

Obtaining full approvals for its tablet portfolio for young patients, especially the pediatric segment.
An ongoing trial for peanut allergy treatment opens the opportunity for a new business segment.
Increasing awareness of treatments for allergies in various geographies.
New partnerships for distribution.

Our annual Responsible Investment (RI) Report outlines our Affiliates’ ongoing commitment to sustainable investment practices and efforts to have a positive impact on people and planet through how we manage our own business.

2023 key achievements and initiatives

Active owners: Encourage companies to effectively manage material ESG risks and opportunities through our stewardship and engagement efforts.
Industry collaboration: Active participation in initiatives like the Canadian Coalition for Good Governance and Climate Engagement Canada that support effective capital markets operations and promote a unified industry voice.
Corporate Social Responsibility commitment: Strong commitment to societal impact through CSR policies prioritizing work environment, employee health and wellness and environmental stewardship.
Affiliate achievements: Notable successes include Crestpoint’s Zero Carbon certification of Arthur Erickson Place, CC&L Infrastructure’s Energy Transition Strategy and our Affiliates’ continued efforts to enhance their approach to incorporating ESG risks and opportunities in the investment process.

Access the full 2023 RI Report

For further details on how our Affiliates are implementing their responsible investing approach, please visit their websites.

A Canadian ten dollar bill on a background of dollar bills

This summary provides a perspective of the modern-day history of Canadian-US dollar exchange rate fluctuations. Figure 1 shows the level of month-end exchange rates from 1953 to March 31, 2024.

Figure 1: History of Canadian-US Exchange Rates

1953-1960	The Canadian dollar spent much of 1953 to 1960 in the $1.02 to $1.06 (US) range. It topped out at $1.0614 (US) on August 20, 1957. Until 2007 this was considered the modern-day peak for the Canadian dollar versus the US currency. The Canadian dollar was at $2.78 (US) in 1864 during the US Civil War, but in those days, it was pegged to the gold standard, a practice the US had already abandoned.
1961-1969	In the early 1960s, the Bank of Canada governor James Coyne and Prime Minister John Diefenbaker were on different economic paths. The government wanted expansion while Coyne wanted to maintain a tight money supply. Coyne subsequently resigned and in May 1962, the government pegged the Canadian dollar at 92.5 cents (US) plus or minus a 1% band.
1970-1972	In May 1970, with rising inflation and serious wage pressures, the Trudeau government allowed the Canadian dollar to float. It drifted to parity with the US dollar by 1972.
1974	On April 24, 1974, the Canadian dollar reached $1.0443 (US). This was the high point for the dollar from when it entered its most recent float period and would not trade at these levels again for another 30 years.
1976- 1986	In November 1976, René Lévesque became Premier of Quebec with a platform that promoted political independence for Quebec. A slide in the Canadian dollar resulted, lasting into the first half of the 1980s. This was a period characterized by rising inflation and interest rates. The Bank of Canada’s key interest rate reached 21.2% in 1981, and the Canadian dollar hit an all-time low of 69.13 cents (US) on February 4, 1986.
1987- 1997	The Canadian dollar rose through the latter part of the 1980s and early 1990s, and on November 4, 1991, reached 89.34 cents (US). This was the high point for the 1990s.
1998-2002	Budget deficits, weaker commodity prices and the aftermath of the international crisis in 1998 in the emerging markets of Russia and Latin America, saw a downward path for the Canadian dollar. On January 21, 2002, the Canadian dollar hit its all-time low against the US dollar dropping to 61.79 cents (US). At this level it cost $1.62 CDN to buy $1 US.
2003- 2006	Through 2003 to 2006, the Canadian dollar started to appreciate sharply driven by a robust global economy that boosted prices of Canada?s commodity exports and pushed the Canadian dollar above 90 cents (US).
2007	On September 20, 2007, the Canadian dollar reached parity with the US dollar for the first time in close to 31 years, with a 62% rise in less than six years driven in part by record high prices for oil and other commodities. The Canadian dollar was named the Canadian Newsmaker of the Year for 2007 by the Canadian edition of Time magazine.
2008- 2009	The Canadian dollar continued to trade near parity in the first half of 2008, but then started a decline that saw it drop below 80 cents (US).
2010	After a strong bounce back, the Canadian dollar reached parity for the first time in 20 months in April 2010.
2011	At the height of the commodity boom, the Canadian dollar reached $1.06 (US) on July 21, 2011. It then experienced its fastest decline in modern-day history as commodity prices rapidly deteriorated.
2016	The Canadian dollar fell to 68.68 cents (US) on January 19, 2016, approximately 7 cents (US) from its historic low, before starting to strengthen against the US dollar and finishing the year at 74.57 cents (US).
2017- 2024	Currency fluctuations have been somewhat muted since 2016, although the Canadian dollar dipped back down to around the 70 cents (US) mark in March 2020 during the outset of the COVID pandemic. The Canadian dollar subsequently strengthened and stood at 73.90 cents (US) at the end of March 2024.

Figure 2 shows the history of exchange rates from 1970 and therefore captures the modern-day experience with respect to the Canadian dollar versus the US dollar relationship.

Figure 2: Canadian-US Exchange Rates

Over the period, there have been three major declines in the value of the Canadian dollar, which from peak to trough were each down a little over 30%. The first two declines took around 10 years, while the most recent experienced the fastest decline, which was in part due to the swift collapse in oil prices.

Since the last trough in 2016, the Canadian dollar has moved in a relatively narrow range even accounting for the uncertainty associated with the COVID-19 pandemic and the current high levels of inflation. The Canadian dollar was valued at 73.90 cents (US) at the end of March 2024 and would have to fall below 68.68 cents (US) to test what was previously thought to be the low point for the most recent peak to trough.

Sources: Bank of Canada, CBC, Globe & Mail.