The Canadian dollar continues to be rangebound and is only slightly up from the end of last week against the its US counterpart. The overall picture remains the same. Industrial and consumer activity is bustling on both sides of the border, though the impact of the recent stay-at-home order in Ontario remains to be seen. Americans are doing much better with their vaccine rollout but on the other hand strong commodity prices have buoyed the Canadian dollar. The Canadian dollar has outperformed the US dollar by 1.5% so far this year despite the fact that the US dollar has been strong overall and is up against most other major currencies. The key question remains when the central bank in each country will move in to rein in monetary policy and which one will go first. We know that no moves either on interest rates or on asset purchases are imminent but the market’s expectations about when and how quickly each bank will move will have a lot do with the level of the USD to CAD exchange rate in the near future. To that end, there are a couple of news items to expect this week. First, various officials of the Federal Reserve will give speeches over the course of the week which will be watched closely. Second, the March inflation number in the US will be released tomorrow and will be watched more closely than usual.
