Account to Account
The USD to CAD exchange rate since emergence of Omicron
A month ago we summarized the performance of the Canadian dollar in 2021. Just a couple of weeks later, the Omicron virus hit the financial markets and changed everything, including the USD to CAD exchange rate. Or did it? News reports first emerged on November 24 about a potentially new and very contagious variant spreading in South Africa. That caused a rush to safe-haven currencies like the US dollar and a move away from risk currencies like the Canadian dollar. The decline in the Canadian dollar continued for the next few days as oil fell to multi-month lows and stocks sold off in response to the uncertainty associated with the new variant. Things could have been much worse for the Canadian dollar but the surprisingly strong Q3 GDP report helped partially supported the loonie. Then late last week and earlier this week we began hearing about the possibility that the new virus tends not to cause severe illness and that certain vaccines and therapies may actually be effective against it. That has caused the worries to subside and the markets have returned to some normalcy. Oil has stabilized and recovered some lost ground, though it is still way off of its recent highs. Stocks have recovered to near record levels, though there is a clear rotation away from tech names. And the USD to CAD exchange rate has recovered to very near where it was prior to the emergence of Omicron. Almost on cue, yesterday, the Bank of Canada also reaffirmed its previous path to normalcy and retained its current monetary policy despite the risks of Omicron. USD to CAD is now at 1.269 (CAD to USD is at 0.787). As it happens, that is also right near the Interchange Financial Consensus Canadian Dollar Forecast for where the exchange rate is expected to end 2021.