Shaun Osborne, managing director and chief FX strategist at Scotiabank, joins BNN Bloomberg to discuss the Canadian dollar. He says the loonie offers good value despite how the bearish view from investors.

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Investors are showing a significant lack of confidence in the Canadian dollar, commonly known as the loonie, as global economic uncertainties persist. This sentiment has been echoed by FX strategists, who believe that the bearishness surrounding the loonie is expected to continue.

The Canadian dollar has recently witnessed a downward trend, declining in value against most major currencies. This can largely be attributed to concerns over the struggling global economy, trade tensions, and geopolitical uncertainties. As a result, investors have turned their attention towards safer assets, causing a depreciation in the loonie.

FX strategists have been closely monitoring the investor sentiment towards the Canadian dollar, and their analysis suggests that the bearishness is likely to persist. Several factors contribute to this outlook, including the fragile recovery from the COVID-19 pandemic and the uncertain future of global trade relationships.

One of the primary concerns for investors is the ongoing trade tensions between Canada and the United States. The renegotiation of the North American Free Trade Agreement (NAFTA), which resulted in the United States-Mexico-Canada Agreement (USMCA), has created uncertainties. The possibility of trade disputes, tariffs, or changes to trade flows could have a significant impact on the loonie’s value.

Additionally, global economic uncertainties have been amplified by the impact of the COVID-19 pandemic. Despite the gradual recovery of economies worldwide, the risk of new waves of infections and the effectiveness of vaccination campaigns remain uncertain. These uncertainties contribute to the overall cautious sentiment surrounding the Canadian dollar.

Furthermore, geopolitical tensions, such as the strained relationship between China and Canada, have also negatively impacted investor confidence in the loonie. Ongoing disputes related to trade, human rights concerns, and legal matters have the potential to disrupt economic ties and affect currency exchange rates.

FX strategists believe that until these uncertainties are resolved or mitigated, investors will continue to favor safer assets. The US dollar, Japanese yen, and Swiss franc, which are traditionally considered safe-haven currencies, have experienced increased demand in recent months.

In conclusion, the bearish sentiment towards the Canadian dollar persists among investors. FX strategists believe that the uncertainties surrounding the global economy, trade tensions, and geopolitical risks are significant factors contributing to this outlook. Until these uncertainties are addressed, the loonie is likely to remain under pressure, leading investors to seek safer alternatives.