With stocks renewing their move up today and USD to CAD unchanged, we continue to see the decoupling of the exchange rate from equity prices. Yesterday, we started out similarly but the Canadian dollar grinded higher by about 0.5% during the course of the day, despite flattish stock prices. As we move towards the end of the pandemic economy, markets are beginning to anticipate that traditional domestic factors will weigh more on the exchange rate. Later this morning, Deputy Governor Lane of the Bank of Canada will give a speech that might provide clues as to the path forward for the central bank. That will provide a nice point of comparison for later in the afternoon when Fed Chairman Powell speaks and might seek to guide the markets as to the timing of pullback of monetary policy. US January inflation figures this morning came in this morning at expected levels and did not move the market.
