Economic Outlook and Summary
The greenback has made a slight comeback as US treasury yields fall and investors look at high-risk investments. The Canadian dollar lost some ground, but still holds on as pandemic restrictions in Canada begin to lift and the economy begins its return to normalcy.
The global economy continues to being a low stress state and oil prices have risen to a new high to keep up with the demand of economic recovery.
The USD and Federal Reserve
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The USD broad index made a gain of 2% and treasury yields dropped by 1.3% causing the USD to jump by about 5 cents. Treasury yields fell as investors were no longer confident in the bond market due to concern with rising rates of new COVID variants in countries where vaccines are not so readily available. Another factor that helped bolster the US dollar was the announcement from the Federal Reserve that there were talks of reducing quantitative easing which boosted investor confidence in the US dollar.
The Canadian Dollar and Bank of Canada
The Canadian dollar remains strong despite giving up 5 cents to the US dollar. The Bank of Canada BOS had improved from 2.95 to 4.17 which was a good jump signaling to investors that the CAD still had room to improve. Furthermore, this survey was conducted at the end of May where provinces in Canada had just begun lifting their COVID Restrictions. On top of this, in June, Canada added 231,000 more jobs which exceeded the census expectations. The Canadian dollar seems to remain in a good state even as the US dollar took back some of its gains.
Oil Prices
As the global economy recovers, the demand for oil continues to rise. In June, the price of WTI oil has increased to $71.4 USD per barrel from $65.2 USD per barrel.
Forecast Table
| Bank | 2021 – Quarter 4 (USD/CAD) | 2022 – Quarter 1 (USD/CAD) |
| Scotiabank* | 1.20* | 1.19* |
| Bank of Montreal | 1.20 | 1.20 |
| Canadian Imperial Bank of Commerce | 1.27 | 1.28 |
| Toronto Dominion Bank* | 1.23* | 1.24* |
| National Bank | 1.21 | 1.21
|
*Forecast based on previous month. Forecast Table is for mid-market rates, and subject to change anytime.
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