The Canadian dollar is unchanged and has been trading in a very tight range since Wednesday. USD to CAD is at 1.252 (CAD to USD at 0.798). Other markets have also been trading with little volatility. Equity prices continue to hover at record levels but remain little changed over the last couple of days. Similarly, oil prices have stabilized over the last few days, though they remain well below where that commodity has been trading for most the last few months. We expect USD to CAD to continue to trade in a tight range until Wednesday when we get further colour from the Federal Reserve on its plans for US monetary policy as well July inflation figures in Canada. Even then it is unlikely that we will see much volatility resulting from those events. At this point, most expect that the Fed will lay out a plan for tapering monetary stimulus in its September meeting and a single Canadian inflation print is not likely to change the views of the Bank of Canada. The impending Federal election in Canada will not impact exchange rates unless we see dramatic changes in the polls.
