Economics
Signs Are Flashing Loonie Surge Has Gone Too Far, Too Fast
- Canadian dollar has seen strong gains since start of year
- Risks seen building, including possible trade talks with U.S.
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Traders may think they are smarter than central bankers, but when Bank of Canada Governor Stephen Poloz says "uncertainty" a dozen times in a speech, they should listen.
The loonie has gained about 4 percent against the U.S. dollar since touching a 10-month low at the end of last year amid higher oil prices and a weaker greenback. But looming are possible U.S. trade talks, a weak economic recovery and a potentially dovish central bank. These fundamental factors, along with technical indicators, point to a potential reverse.