Another example of a Type Two force, this time in the opposite direction for the Canadian dollar, is the adjustment of the U.S. dollar against most major currencies, reflecting concerns about the U.S. current account deficit. I'd like to elaborate on this as I discuss the recent appreciation of the Canadian dollar.
The recent appreciation of the Canadian dollar Since the beginning of 2003, the Canadian dollar has appreciated by about 40 per cent relative to the U.S. dollar, and by a lesser amount against a trade-weighted basket of the currencies of our major trading partners.