| Canadian dollar vs Gold |
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| Source: Reuters |
The Canadian dollar was the best-performing G10 currency in 2005. There are various reasons for this, including the fact that the currency has been used as a proxy for plays on certain commodities (see table).
However, as gold has risen against the US dollar by about 9% in 2006, the Canadian dollar has fallen against the greenback by about 3%. This suggests that the relationship between the precious metal and the currency has broken down, perhaps removing one of the major supports for the Canadian dollar’s strength.
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