The Canadian dollar continues to hit new multi-year highs. This morning the Loonie is up another 0.3%, this time because the US dollar is broadly weaker. While the Canadian dollar has been flying high for the last couple weeks, helped by the Bank of Canada’s recent shift to more hawkish guidance and oil price gains, the US dollar has also been moving up against most other major currencies as U.S. economic data that has largely supported the case for a rapid recovery from the pandemic. But this morning, the US dollar is broadly lower, partially because a series of speakers from the Federal Reserve yesterday reiterated the “lower-for-longer” message on interest rates. The pressure on USD to CAD is likely continue until there is a change of views about the the path of interest rates in Canada relative to that in the US. Tomorrow morning’s Canadian April employment numbers may provide additional colour about the strength of the recovery in Canada, especially since the most recent closures in response to the third wave.
