“Investors are demanding strict capital discipline, while environmental opposition to new fossil fuel projects and the Canadian government’s plans to cap carbon emissions are also deterring growth,” Reuters explained.
“What we’ve seen over the last month or two has definitely been a quite significant outlier in what has been historically a very steady and pretty consistent relationship,” said Shaun Osborne, chief currency strategist at Scotiabank. “We would probably be in a situation here where the Bank [of Canada] would not be pushing back against the idea of a stronger Canadian dollar.”
And while the loonie is expected to ride the crest of higher energy prices for the rest of 2022, this will come about not due to greater investment, but as a result of Canada adjusting its export-import price ratio accordingly, Reuters analysts said.