The Canadian dollar ended up down 0.8% yesterday and was the worst-performing G-10 currency, as stocks sold off heavily and oil traded. All these assets were reacting to negative market sentiment. This morning, the markets are volatile with equities down slightly and oil up slightly. The Loonie is up 0.2%. The market’s jitters are being largely attributed to US political risk, though the “global second wave” of the virus is likely to blame as well. We are likely to see the Canadian dollar tied to global risk sentiment in the short-term until at least the US election next week. The only other foreseeable catalyst may be the Bank of Canada announcement on Wednesday. Given the uncertainties surrounding the global economy, and the rolling shutdowns in Canada, the Bank of Canada is unlikely to make any news around its Quantitative Easing program. Nonetheless, its statements will be analyzed closely for signs of the Bank’s future intentions and may impact the USD to CAD rate.
