The Canadian dollar is down about 0.5% this morning, taking a breather from its rally of the last several weeks. Some of it is due to USD strength against all currencies but mostly it is a pause in the relentless increase in price of risk. As such, the equities and oil are down as well. At this point, it is clear that the financial recovery is well ahead of the economic recovery, which in turn may be ahead of the public health recovery. The rally in the price of financial assets is being driven more by the huge amounts of support provided by central banks and less by expectations of economic recovery, which still remains uncertain. Daily correlation of the Canadian dollar are still high to equities and increasing to the price of oil.
