The currency market is the largest financial market in the world. It turns over trillions and trillions of dollars every day. But what exactly is it? This episode is all about making sense of the currency market, also known as the foreign exchange market or FX for short. Our guest, Shaun Osbourne, Managing Director and Chief Currency Strategist at Scotiabank explains what makes these markets go up and down, what role the exchange rate has when it comes to inflation, where the Canadian dollar might be headed and much more.
Key moments this episode:
1:33 — Why do currencies go up and down?
2:28 — Why the currency market is the “purest form of the market”
3:19 — How do investors or institutions use the currency market?
6:23 — A quick history lesson about the gold standard
7:39 — Why is the U.S. dollar the currency in which others are judged?
10:13 — Why wouldn’t countries like Canada just use the U.S. dollar as its currency?
11:59 — Decoding the currency ticker
12:40 — Breaking down why the Canadian dollar dropped in the past year
14:27 — Who benefits when the Canadian dollar is low? Who likes it when it’s high?
16:19 — Ballparking a ‘Goldilocks’ rate for the Canadian dollar
16:36 — Where might the Canadian dollar go in the next six months?