The Canadian dollar is the worst performing major currency for the second day in a row. At the moment USD to CAD is at 1.290 (CAD to USD at 0.775). The loonie is now down 1.7% since Thursday morning and trading near nine month lows. The move comes amid a plunge in oil prices (and declines in other commodities) on worries about the strength of the global economic recovery. Those worries are fed by the growth of the coronavirus in countries with low vaccination rates as well its persistence in countries like Canada and the US with high vaccination rates. The sharp move down in CAD against USD actually started on Wednesday afternoon after the minutes of the July Fed meeting seemed to confirm the market’s suspicion that the US central bank would begin pulling back monetary stimulus in October. Interestingly, the Canadian dollar continued to grind lower even after North American stocks recovered from their sell-off during the trading day yesterday. This morning, stocks look to open up down again as overall sentiment remains risk averse. Monetary policy in Canada has become a bit of an election issue and it is possible that inflation will figure in the political discourse during this Federal campaign but the campaign has yet to impact the exchange rate as investors view the result of the election as largely leading to the status quo in fiscal and monetary policy.
