The USD to CAD rate is flat this morning and has been trading at around the same level for the last couple of days. Overall, markets have become stable after a bout of volatility related to the spike in yields late last week. Housing prices and sales activity in Canada’s largest cities continue to be strong as a result of low mortgage rates and higher savings as well as expected changes in commuting patterns. But as the Governor of the Bank of Canada noted last week the increases are not yet sufficiently concerning to alarm policy makers and therefore have no on impact on the USD to CAD exchange rate. Oil continues to trade near 1 year highs and (WTI) seems to have found a level just above USD60 a barrel. We will get US oil inventory numbers throughout the day and that may move the price of that commodity and therefore the Canadian dollar. The biggest risk to the markets right now is that the policy makers begin to hint that they are catching up to the fact that the global (especially Canada/US) economy is recovering faster than anyone expected and there may be a brake on monetary stimulus sooner than the markets are currently pricing in. Joe Biden’s announcement that every US adult will be eligible for vaccination by May obviously elevates the risk of a faster-than-expected end to monetary stimulus.
