As the mood in the currency markets turns risk averse, the US dollar is trading at its highest level against its Canadian counterpart in nearly a month. A disappointing US July retail sales number and a decline in an important measure of consumer sentiment are contributing to a sense that some parts of the economic recovery are running out of steam. Further adding to the sense of a slowing consumer recovery was a decline in shares of Home Depot as the home renovation craze seems to have cooled. The currency markets are also impacted by the sudden lockdowns in New Zealand after that country had largely escaped the pandemic so far. That news sent the Kiwi dollar down sharply and created some flows into USD. Finally, the view that the Fed minutes tomorrow will lay out a plan for tapering of US monetary stimulus is gaining momentum and pushing the US dollar up. USD to CAD is currently at 1.262 (CAD to USD at 0.792).
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