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USD to CAD Update: Canadian Dollar Loses Ground as Covid Surges
The Canadian dollar is down 0.3% this morning as the markets experience a notable bout of risk aversion related to the global resurgence of Covid as well dimming hopes for any kind of stimulus package in the US. Oil is down 2.5% on related global demand fears and stocks are trading significantly lower than Friday. Domestically, two important economic indicators will be watched closely this week; the Bank of Canada release on Wednesday, and the GDP figure on Friday. The Bank is not expected to change rates but the its statements with respect to the quantitative easing program will be important. The GDP figure will also be important but not likely a market mover. At this point it is clear that the economy has bounced back faster than expected at the beginning of the pandemic. The open question is how much this second wave and the accompanying economic slowdown will impact the economy and how the Bank of Canada perceives that risk. For example, if the Bank views the most recent restrictions as a significant setback to the economy and signals a slower-than-expected unwind of its QE program then the Canadian dollar will weaken.