The US dollar has regained some of the lost ground from earlier this week and is up 0.4% this morning against the Canadian dollar. The stronger US dollar comes as stocks look to open down modestly after reaching record levels. The economic picture on both sides of the border remains mixed. On the one hand, the vaccination efforts are on the way and the end of the pandemic in the next few months is baked into market expectations. Asset prices (ranging from stocks to real estate to ….) are at record levels. On the other hand, the recovery has been mixed and choppy, especially on the jobs front. There has been no strong signal from either the Bank of Canada or the Fed as to when monetary stimulus efforts will be scaled back. Indeed, the only message from the Fed this week was dovish with Chairman Powell saying the Fed would remain “patiently accommodative”. That comment and the strong equity markets and global sentiment this week account for the fact that the US dollar is down 0.5% against the Canadian dollar this week (even after this morning’s gains).
