Commodity prices vaulted to their highest levels since July 2015, taking the CAD/USD below the 1.21 trade ranges into the lowest levels seen for the last three years. Prices for lumber and oil have risen sharply in the past three weeks, while the commodity index climb from April 14th is in excess of 10.96% fuelling the commodity linked Canadian dollar currency.
The Bank of Canada cut their initial $4 billion to $3 billion in asset purchases, becoming the first proactive major central bank to trim their pandemic-era money-printing stimulus program and hinting at raising interest rates by as early as 2022. The Bank of Canada is the first central bank to ease on monetary policy, creating divergence between countries. The US continues to flood the market to aid in their economy as the US government spending now exceeds 20.7% of their GDP with the US budget of $4.829 trillion in quantitative easing.
In the months ahead, reports for US employment, US supply constraints, consistent inflation target of 2%, will then allow the Federal Reserve to support the reflation narrative, prompting Fed members to reign in their monetary support.
“The Bank of Canada
is the first central bank
to ease on monetary policy,
While the Canadian dollar has been the best performing G10 currency in 2021, the remainder of the year still has opportunities for both buyers and sellers as both economies push their economies for growth. As rollouts of vaccines, and monetary policy boosting the Canadian and US economies, the CAD/USD trade ranges are expected between 1.15-1.25, while Q2 average expected trade range is at 1.22.
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