The Canadian dollar is up 0.8% this morning after touching seven month lows on Friday. At the moment USD to CAD is at 1.272 (CAD to USD at 0.786). Equities are also up after a losing week while oil is up 3% after plunging 9% last week. The bounce in sentiment comes as investors are hoping that central banks will maintain stimulus amid several lingering risks to the global economic recovery. Those hopes were fueled by comments from Fed officials suggesting that there is some support for moving out the beginning of tapering of asset purchases to December of this year. As such, as is often the case these days, the markets are intensely focused on Chairman Powell’s speech this Friday where some are expecting that he will further provide further support for that view, especially in light of surging Covid cases in the US. There is some good news on the virus front elsewhere in the world as China has apparently again reduced cases down to zero while cases in Australia and New Zealand seem under control. On the domestic front, there is little in terms of Canadian economic data that could impact exchange rates this week and the news continues to be dominated by the election campaign. Despite the emergence of inflation and monetary policy as a campaign issue, we do not see the campaign impacting rates in any way unless there is a sufficiently large change in the polls such that there is a change in government expected in Canada.
