Yesterday, we saw a notable decline in the value of the CAD against USD. The value of USD to CAD is now at 1.245 (CAD to USD: 0.803). The loonie lost much as 1.2% over the day and combined with declines in the last couple of weeks now sits around two and a half month lows. While part of yesterday’s move was a broad rally in the US dollar, much of it was weakness specific to the Canadian dollar. CAD was responding to several factors including a retreat of oil pieces from 6 year highs as the inability of OPEC to reach an agreement has raised the possibility of an uncontrolled supply increase at the end of the expiry of the current deal in August. Also contributing to the CAD weakness was a dip in stocks from their recent record levels. Finally, sentiment on global recovery turned negative based on economic data out of the US and EU further pressuring the trade-sensitive Canadian currency. Today, the markets are holding steady and awaiting the release of the Fed June minutes at 2 PM ET. That which will provide further indication on how serious members are about pulling back on stimulus and any surprise could renew volatility in exchange rates.
