June 2021: FX Outlook
Economic Outlook and Summary
The Canadian Dollar continues to hold on to its growth throughout this economic recovery as Canada seems to be doing the right thing whereas the US dollar continues to take a hit as the odds do not seem to be its favour. The price of oil continues to rise as the lockdowns begin to end.
The USD and Federal Reserve
The US dollar continues to fall as the US dips another 2% in May. The Federal Reserve continues to have major effect on currency trading. In April, the federal reserve has said once again that its decisions would not hurt the US economic recovery. However, unemployment in the US has increased to 6.1% in May according to a government report. This meant the QE tapering was not on the table for the reserve leading to non-commercial traders shorting the USD and causing it to slip.
The Canadian Dollar and Bank of Canada
There are few reasons why Canada’s loonie is still holding on to its recent gains. Firstly, the commodity market is still high in demand, WTI Oil has grown by 7.5% in April and 4.3% in May which is much higher than its pre-pandemic price. The precious metals and minerals index has also risen by 24.3% in the past 12 months. Secondly, our progress in vaccinating the general population is certainly a driving force as well. Canada’s one dose vaccination rate has now exceeded the U.S’s which is a sign of normalcy returning soon. Lastly, Canada is ranked second in the G7 in its economic growth being only 1.7% below its pre-pandemic levels.
As the global economy recovers from the pandemic, the push for oil increases as consumers are returning to pre-pandemic habits and are beginning to shop and travel again, as the United States and Canada lift their lockdowns. The price of oil seems to be well on its way to $75 USD a barrel as it reaches an all time high of $70 USD a barrel in June from an average of $65 USD a barrel last month.
||2021 – Quarter 3 (USD/CAD)
||2021 – Quarter 4 (USD/CAD)
|Bank of Montreal
|Canadian Imperial Bank of Commerce
|Toronto Dominion Bank
*Forecast based on previous month. Forecast Table is for mid-market rates, and subject to change anytime.
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By Writer | June 16, 2021 | Monthly Canadian Dollar Outlook/Forecast | 0 comments