The blowout jobs report in the US on Friday and the accelerating vaccination efforts in that country are further fueling the sense of overall economic optimism. Stocks are once again pushing into new record territory and all risk assets are on the upswing. As such, the Canadian dollar starts the week 0.3% above where it closed before the long weekend. The Loonie has shown great strength so far this year, even against the US dollar which itself has been a strong performer. There are several reasons for the firm Canadian dollar. Commodity prices are strong, the US (by far our largest export market) is recovering fast, and the Bank of Canada has dropped some hints of an eventual pulling back on its quantitative easing programs. For USD to CAD watchers, the real question is not when the Bank of Canada and the US Federal Reserve start tapering but rather who goes first. We will get a further indication of the Fed’s thinking with the release of its minutes on Wednesday.
