The USD CAD exchange rate is flat this morning. But after the moves of the last two weeks, the Canadian dollar is now at its strongest level since early March which was the beginning of the Covid crisis in North America. The strength of the Canadian dollar is largely due to broad weakness in the US dollar. In fact, the US dollar index (DXY) which is a measure of US dollar against various major currencies is its lowest level since early March. Depending on your perspective the US dollar weakness is either due to the uncertain fiscal and political situation in the US or the historic EU Covid recovery deal making other currencies more attractive or because as the recovery continues globally the safe-haven demand for the US dollar is dissipating. In Canada, S&P affirmed Canada’s AAA credit rating despite the growing cost of shielding the economy from COVID-19. The move was no impactful on exchange rates but somewhat surprising since Fitch had a few weeks earlier downgraded Canada by one notch.
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