Account to Account
US dollar jumps on selection of Powell to second term at the Fed
The Canadian dollar has hit a 7-month low this morning as the US dollar jumped broadly on the selectin of Jerome Powell to lead the Fed for a second term. That selection has removed any uncertainty that the US central bank will move to unwind its massive policy support as currently planned and removes the possibility of a change in central bank direction in the midst of an economic recovery. The alternative candidate was supported by the progressive wing of the Democratic party and seen as prone to be potentially more dovish. At the moment, USD to CAD is at 1.267 (CAD to USD is at 0.789). Also pressuring the Canadian dollar is continued relative weakness in energy prices, with oil loitering at 7-week lows this morning. The holiday-shortened week in the US may lead to unusual volatility in the exchange rate, especially around the release of US GDP figures tomorrow and Fed minutes on Wednesday. The Covid situation in Europe continues to put a damper on general market sentiment with the situation in Austria and Germany receiving the most attention. There isn’t much on the domestic calendar in Canada that could impact the loonie this week.