The US dollar is up 0.2% against the Canadian dollar this morning. But the Canadian dollar is actually outperforming other currencies as the US dollar index (USD against major trading partners) is up 0.4%. The banking holiday in Canada means that volumes are lower than usual but the outperformance of the Canadian dollar actually has to do with oil, which continues its rally, up another 2.5% this morning. More broadly, the focus of the markets has now long passed from the risk of post-election mayhem to what a Biden administration might mean for the US and world economy. The consensus thinking is mixed on what the impact on the US dollar might be. Generally, markets believe that a Biden administration will pursue a more expansionary fiscal policy (more stimulus) which would be bearish for the US dollar but also possibly a more hands-off approach to the Fed which may ultimately drive up the US dollar. Regulatory policy under Biden on issues like climate, big tech, labour and so on may also be more restrictive under Biden, which would in the short term slow growth.
