The Canadian dollar is up 0.2% this morning and is trading half a penny away from its highest levels since the beginning of 2018. The Loonie has now gained nearly 1.5% since the Bank of Canada’s surprisingly hawkish message last week. The bulk of that move came right after the announcement on Wednesday but the reverberations continue to influence the exchange rate as the Canadian currency has continued to creep up despite overall USD strength and weaker oil prices this morning. This week, most of the potential market moving events are happening south of the border. Most importantly, the Federal Reserve statement on Wednesday will give the markets a good opportunity to compare the Fed’s views to those of the Bank of Canada. Will the Fed also surprise the market by being more hawkish? It seems possible given the similar economic conditions in the two countries but on the other hand, the Fed takes a global view and the Bank of Canada has the luxury of being a price taker when it comes to global macro conditions. Regardless, USD to CAD will likely experience some volatility around that event. This morning, the markets are focused on a few major tech company earnings, which are expected to be astronomical. If those expectations are met and equities remain calm, you can expect the strength in the Canadian dollar to hold for the rest of the day.
