The USD to CAD exchange rate is nearly unchanged this morning after losing some ground yesterday, partially as a result of the unexpected stay-at-home order in Ontario. The Loonie is now trading near the middle of its range so far in 2021 and near our short-term consensus forecast. There really is not a whole lot on the immediate horizon that can move the exchange rate materially in one way or another other than unexpected macro geopolitical developments or central bank actions. For example, yesterday’s release of the minutes of the Federal Reserve meeting provided no surprise as to the Fed’s thinking on when it might pull back on monetary stimulus. Another potential near-term catalyst for the Loonie is the price of oil which could react, for example, to a sudden removal of sanctions on Iran which would drive down oil prices. If that were to happen, the Canadian currency would come under pressure.
