Canada’s economy grew 0.7% in November which was better than the forecast of 0.4%. In the US, Personal income and spending levels for December also came in at better than expected levels. But the focus continues to be on volatility in stock markets and the USD to CAD exchange rate is moving roughly in line with stocks. Overnight, when it looked like we would see a notable sell-off in stocks, the USD was up significantly against CAD. But then stocks recovered somewhat and so far this morning, USD is down 0.5% against the Canadian dollar. As we have noted previously, we do not expect the “GameStop phenomenon” to last more than a couple of weeks but what the saga has done is expose the possibility that we are at a speculative peak in stock prices. If and when a correction comes to stocks, you can expect the USD to gain against currencies like the Canadian dollar. As it stands now, the USD is up 1% this week against the Canadian dollar and we expect the volatility to continue.
