Expected USD/CAD Range: 1.046 – 1.051 Update: After a series of economic data this morning showing steady improvement in the US economy, the Loonie is flat at 1.048. We have also heard overnight from several central banks, most notably the Bank of Japan (policy steady as economy improves modestly), the Bank of England (policy steady) and the European Central Bank (slow recovery and accommodative policies to continue). The markets are still digesting the information but there is actually little surprise in any of the news this morning. Market participants continue to keep an eye on developments relating to Syria with the focus today on any comments coming out of Russia and the G20 meeting that might indicate a desire by the US to seek a diplomatic solution before engaging in military action. The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have slowed notably. At the same time, the ongoing (admittedly halting) recovery in the US will sooner or later lead to a tapering of the Fed’s bond purchase programs. As to the timing of the announcement, there seems to be broad consensus forming about tapering beginning later this year with a majority of analysts focused on September. Closer to home, Canada’s new central banker shows no inclination towards tightening in the near future. As a result of all of this and not surprisingly, the CAD has declined 4% relative to the USD since the beginning of the year. We expect the CAD to be even lower relative to its US counterpart by the end of the year.
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