December 8, 2022

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USD/CAD higher for the second day with OPEC looming

1 min read

Oil still riding high

Oil still riding high

USD/CAD is nearing 1.2400 after a 54-pip gain today that’s part of a broader selloff in the commodity currencies.

There’s nothing in the broader market that would suggest two days of decent declines in the loonie. Equities were strong yesterday and today. Treasury yields have generally been lower, and are flat today.

Overall, I don’t see much of a case for further USD/CAD gains here. There are some major risks this week with non-farm payrolls coming on Friday something to watch but we’ll cross that bridge when the data is released. On the Canadian side, April GDP tomorrow will be weak and brushed off because of lockdowns and Thursday is a Canadian holiday.

I tend to think the weakness this week is exaggerated by month/quarter-end flows. In the bigger picture, there has been a turn after a year of selling but so long as 1.27 holds, the trend lower is clear.

Moreover, today’s US consumer confidence numbers underscore the boom that’s coming out of the pandemic. That will keep growth at high rates and commodity prices bid. Domestically, the Canadian vaccine campaign is firing on all cylinders and take-up has been world-leading.

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