Yesterday, the first day of trading for 2021, was an interesting one. After slipping in the morning to near 2 1/2 year lows in the morning, the US dollar regained that ground and then some, clawing back a total of 0.7% against the Loonie. The reversal occurred in response to the sell-off in stock markets, which in turn was a reflection of concern about the spread of the virus and the slow vaccination rollouts around the world. Today, the senatorial elections in Georgia are being watched closely. If the Democrats take both seats and control the Senate, expansionary fiscal policy will become more likely and that may contribute to weakness in the US dollar. This morning, equity markets are flat and the Canadian dollar is unchanged and a full penny from the multi-year highs that it was approaching yesterday morning. In addition to the US election, we are watching ongoing tensions in the Persian Gulf (which may impact oil prices and therefore the Canadian dollar) as well as US inflation data expected to be released tomorrow morning.
