The market volatility continues. The US dollar has given up 0.5% against the Canadian dollar this morning. That move comes after USD ended last week up 1.8% from the 3-year lows that it hit earlier in the week. The focus is really on the bond markets and yields. Last week, yields rose dramatically as inflation expectations moved up. That led to a sell-off in stocks and other risk assets, including the Canadian dollar. This morning, bond yields have gone done a bit and stocks are recovering some of their losses. As a result, risk currencies like the Canadian dollar are also gaining this morning. There are a couple of Fed speakers due to speak later today and that could add to the volatility in the markets. So, right now, the most important factor for USD to CAD is bond yields (the higher yields on both sides of the border, the lower the Canadian dollar). Until yields find some stability, USD to CAD will continue to bounce around more than usual.
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