Relationship Between Rising Us Unemployment and the...

Is there a relationship between rising US unemployment and the rise of the Canadian dollar? Canada’s financial stability depends on the health of America’s economy, as international trade accounts for 45% of Canada’s Gross Domestic Product (GDP) and 79% of exports are to the United States. Canadian and American unemployment rates are positively correlated for that reason, as exemplified in early 2009. Canada’s unemployment rate quickly steepened as the United States’ rate gradually increased to about 10% (refer to graph 1 and 2). During this time, Canada’s growing trade surplus became a deficit in only a few months (refer to graph 3). From this data, one can determine that Canada’s exports decreased rapidly due to rising economic†¦show more content†¦Although lower interest rates can improve domestic spending, it will discourage foreign investors because the return on their investments decreases. As of September 2011, the US interest rate is close to 0% and Canada’s rate is at 1% as determined by the Bank of C anada. Low interest rates indicate that the US is in poor financial health. More countries will want to invest in Canada if the US is in a risky financial situation and additionally, provides low returns. The value of the Canadian dollar rises when demand increases. Due to America’s increasing government debt and declining interest rates, Canada’s economy is comparatively more stable. Canada’s credit rating is currently higher than America’s. A credit rating indicates the financial health of a country and how large the risk is for lenders to invest. Standard and Poor’s, a credit rating agency, currently downgraded America’s rating to AA+ from the highest score of AAA. The downgrade was a result of the U.S.’s increasing debt from the recession. Canada’s credit rating is still the highest at triple-A because of the country’s stability. Canada is more attractive to invest in, as there are solid returns on the interest rates and low risk for lenders. Increased demand in Canadian assets can result in a higher exchange rate. Investors want to put money into a country where they believe it is a safe haven. Although Canada can become moreShow MoreRelatedRising Us Unemployment and the Canadian Dollar1609 Words   |  7 PagesIs there a relationship between rising US unemployment and the rise of the Canadian dollar? Canada’s financial stability depends on the health of America’s economy, as international trade accounts for 45% of Canada’s Gross Domestic Product (GDP) and 79% of exports are to the United States. Canadian and American unemployment rates are positively correlated for that reason, as exemplified in early 2009. Canada’s unemployment rate quickly steepened as the United States’ rate gradually increased toRead MoreThe Canadian Economy : An Overview And Response1822 Words   |  8 PagesJimmy Yuan Kristen Kang CIA4UP March 4 2016 The Canadian Economy: An Overview and Response Canada’s wakeup call has arrived in the midst of economic decline. Canadian economic activity has been recently weaker than was anticipated due to a number of reasons. The falling loonie, low commodity prices, lower business investment and weakening employment performance have contributed to its failure. Although Canada’s fourth-quarter 2015 annualized Gross Domestic Product (GDP) growth rate rose by 0.8%,Read More1.. Summary: Donald Trump Is Planning To Re-Establish The1873 Words   |  8 Pagescould change is Canadian’s work visas. There are around 30,000 to 40,000 Canadian’s who work in the united states using a special work visas. 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