USD/CAD has damaged out of its 2024 vary because the US greenback soars throughout the board. Beforehand, the pair had stalled 3 times proper round 1.3540 nevertheless it’s lastly damaged by way of in a 115 pip bounce.
USDCAD day by day
Oil is up 50 cents at present so Canada is getting assistance on that entrance however pure fuel continues to pluge and is down one other 5.5% at present to $1.67, which is nearing the pandemic lows (and 2016 lows earlier than that).
The brewing drawback for Canada is housing. The fast turnaround in rates of interest since October have been a lifeline for Canadian mortgages however Canadian charges monitor US charges intently and Canadian benchmark 5-year charges are actually again to late-November ranges and up 50 bps from the lows.
In the event that they keep larger for longer, it may chase out some springtime house consumers and put a recent chill in the marketplace. Furthermore, Canada’s broader economic system is not weathering excessive charges in addition to the US. Prolonging excessive charges may result in a rougher recession or — if Canada cuts and the US retains charges excessive — open up wider fee differentials. That is one thing that would re calibrate USD/CAD larger and result in a problem of the 2023 highs close to 1.3875.
The issue for the Financial institution of Canada is that Canadian jobs and inflation have been simply as robust as within the US however with a a lot weaker broader economic system. It is not at a stagflationary degree but nevertheless it’s not in place. With at present’s strikes, a reduce in Canada now could be now not totally priced in for July, so a tough spring may lengthen by way of summer time.
