Account to Account
USD to CAD Update: US dollar nears 7-month high against Canadian dollar
The US dollar is up a notable 0.8% against the Canadian dollar this morning. At the moment USD to CAD is currently at 1.275 (CAD to USD at 0.784). The US dollar is now trading near its highest level in nearly 7 months (see graph). For much of the first half of this year, the Canadian dollar was the best performing major currency. Multiple factors contributed to the loonie’s rise early in the year; a strong global economic recovery, a risk-friendly investment environment, rising oil and commodity prices, and the view that the Bank of Canada was likely going to be ahead of the Fed in moving to rein in monetary stimulus. Then in June, the tide started to turn as those same tailwinds began to turn to headwinds. The move down in CAD in the last couple of days is indicative of what we have seen for several months now. The highly anticipated release of the Federal Reserve meeting minutes yesterday confirmed the market’s expectation that the world’s largest central bank would begin tapering stimulus around October. At the same time, while we might have expected that the reduction of liquidity would coincide with an end to the pandemic and strong economic growth, the persistence of coronavirus variants, mixed economic signals in much of the developed world, and a clearly slowing growth in China raise questions about the strength of the global economy. Reacting to those same concerns, oil is down 3% and now at its lowest level in a couple of months. Stocks are also selling off today as overall sentiment turns risk-averse.