The Canadian dollar starts the week right where it ended last week. USD to CAD is at 1.257 (CAD to USD is at 0.795). The calm comes after a tumultuous week in which the loonie traded in a two penny range as strong corporate earnings and recovering oil prices offset worries about damage to the global economic recovery caused by surging Covid variants. Corporate earnings releases will continue to come at a rapid pace this week. Attention also turns this week to Wednesday’s Federal Reserve statement and how aggressively the Fed messages its eventual tapering of asset purchases. For now, stocks are at record levels and oil has stabilized once again at near recent highs. But any indication that the Fed intends to move sooner-than-expected to rein in monetary stimulus would upset that apple cart and would push the US dollar up. On the flip side, also on Wednesday, we get a highly anticipated report on June inflation in Canada. An inflation reading that is well above consensus also has the potential to move the Canadian dollar up as it would be seen as forcing the Bank of Canada’s hand on monetary policy.
