Expected USD/CAD Range: 1.031 – 1.036 Update: The picture is still murky but in the battle of relative economic performance (which is what is driving the USD/CAD exchange rate these days), America is ahead this morning. Construction and productivity figures released this morning in the US came in at or above expectations. In Canada on the other hand, manufacturing sales in June were down 0.5% while economists had expected an increase of 0.3%. Not surprisingly, the Loonie is down 0.3% against the US Dollar and hovering at the 1.034. 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.
Account to Account
