The Canadian dollar is down 0.7% this morning and now trading at a 3-week low against the US dollar. Stocks continue their sell-off with the S&P down another 2.2% this morning. Oil is down 5% and trading near 4-week lows. The reason for this volatility are familiar by now. The resurgence of the virus in much of the developed world followed by restrictions that will negatively impact economic activity. All of that is compounded by the absence of a stimulus package in the US and political uncertainty heading into an election which is next week but which may be contested for several weeks afterwards. Adding to the volatile environment for USD/CAD, we are awaiting the Bank of Canada’s statement and Monetary Policy Report this morning as well as the news conference later today. In our view, it seems unlikely that the Bank of Canada would make any announcement which would support the Canadian dollar today.
