Political instability... to save the economy

Canadian Press, August 26. The Bank of Canada is warning it is prepared to intervene to ensure Canada’s fragile economic recovery is not derailed by a resurgent loonie. With evidence mounting that the economy is emerging from a short but deep recession, deputy governor Timothy Lane cautioned Tuesday that the recovery is still uncertain and the loonie’s strength is worrying.

Globe and Mail, tonightPolitical uncertainty could drive the Canadian dollar lower overnight following Opposition Leader Michael Ignatieff’s comment that the federal Liberals will no longer prop up the minority Conservative government, a leading currency strategist said Tuesday. “I think the impact of the political news is important, and creates some uncertainty, which is always a Canadian dollar negative,” Camilla Sutton, a currency strategist with the Bank of Nova Scotia, said in an interview.