Rapidly changing market sentiment continues to be the primary driver for the exchange rate between the US and Canadian dollars, causing the Canadian dollar to oscillate. On Friday, concerns about the European banking sector, particularly Deutsche Bank, resulted in a one penny loss for the Canadian dollar, hitting a 9-day low. However, today, the markets have shown signs of optimism as banking regulators provide more assurances, and some troubled banks’ shares climb in value. As a result, the Canadian dollar has regained most of its losses and is currently trading at 1.3656.
Since Canadian commodities, particularly oil, heavily rely on exports, the value of the Canadian dollar is highly influenced by the global economy’s health. Therefore, any news indicating trouble ahead for the global economy tends to weaken the Canadian dollar, while positive news means more demand for Canadian commodities and the Canadian dollar.
Looking ahead, we anticipate more volatility in the USD/CAD exchange rate in the coming weeks leading up to the Bank of Canada’s interest rate announcement on April 12th.
