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USD to CAD Update: Loonie Flat, Looking at US Election for Direction
For the second day in a row, risk sentiment is modestly positive this morning. The Canadian dollar is flattish and now up 0.3% over the week but still mostly rangebound. There are two domestic data points on the horizon for the Canadian dollar. First, there is the Bank of Canada release next Wednesday. Second, there is the GDP figure on Friday. Other than that, USD/CAD is and will continue to be driven in the next couple of weeks primarily by global developments, and in particular, US political events. If Biden continues to lead and looks like he will win decisively, expect CAD to strengthen as the risk of a long-winded election fight is avoided and a stimulus package becomes very likely. On the other hand, if Trump makes it a close race then expect uncertainty and a stronger USD as investors seek risk-havens.