It doesn't matter that there is a trade imbalance... except...
Bank of Canada says further US$ fall needed
Just think it through:
- Tangible goods in; dollars out
- Too many dollars out; not enough U.S. goods or assets wanted
- Value of dollar falls globally
- Cost of global goods go up (e.g., oil)
- Cost passed on to U.S. consumers (inflation)
- Federal reserve raises interests rates to "combat" inflation
- Economy falls
It just doesn't matter... right... except it's all related:
Downside risks to world economy have increased-Rato
