The past three weeks have been marked by nothing but doom and gloom on the global economic stage. The damage has been deep and far-reaching. By way of a couple of examples: the UK stock index (UK FTSE 100) is experiencing its longest losing streak since July of 2019, and the New Zealand dollar is flirting with its lengthiest losing streak in the currency’s history. The downward spiral has primarily been driven by a continuous flow of negative economic news from China. The world’s second-largest economy seems to be sputtering after 40 years of driving the global economic engine. Consequently, investors have been offloading riskier holdings in favor of the safety offered by the US dollar and US Treasury Bills. The Canadian dollar (considered a riskier currency) has also taken a hit and is currently hovering close to a two-and-a-half-month low against the US dollar.
Up ahead for the Canadian dollar is the release of the retail sales numbers on Wednesday morning, but we don’t expect this to move the needle as far as the USD/CAD pairing goes. Markets are already looking past this to Friday’s scheduled speech from Fed Chair Powell, as his tone will likely determine global sentiment and whether or not the Canadian dollar will drop further and set a new low (CAD/USD high) against the US dollar.