September 2021: FX Outlook
Economic Outlook and Summary
The global economy is still recovering while fighting the pandemic; we’re not out the woods just yet, even with increased vaccination rates. The US dollar has made some gains as the covid cases continue to rise in the world and investors are looking at safer investments. The Canadian dollar on the other hand takes quite the beating as the price of lumber falls. Oil prices drop slightly, and other energy commodities rise due to Hurricane Ida. We hope to see a stronger economy once the current wave of covid and the rough weather season has passed.
The USD and Federal Reserve
Rising covid cases in the world causing increased volatility in the markets as investors seek the USD as a haven of stability. The US broad index has increased by 3% from June of this year. Although employment levels have risen, the Federal Reserve is being wary of how much QE tapering they will apply as they do not want the dollar to appreciate too much to avoid another “taper tantrum” which may do more harm than good to the economy.
The Canadian Dollar and Bank of Canada
The Loonie isn’t doing too hot as it has lost almost 10 cents against the greenback. This is mostly due to the decline in lumber prices and the USD rallying due to investors looking at more stable investment. However, Canada’s Labour market recovery is still outpacing the United States’ and other commodities such as metal and agriculture are still on rise. Even with an election looming, it does not seem it will affect our economic recovery as all parties have promised some sort of fiscal simulation in their party platforms.
The price of oil has dropped from $75/b to $71/b in August from July, but still up $26/b when compared to last year August 2020. Gasoline prices averaged $3.16 a gallon in August which has been the highest it has been since Oct 2014. Henry Hub Natural gas averaged $4.07 MMbtu in August. The rise in Gasoline and Natural gas prices are due to the fact Hurricane Ida is causing reduced refinery runs.
||2022 – Quarter 1 (USD/CAD)
||2022 – Quarter 2 (USD/CAD)
|Bank of Montreal*
*Forecast based on previous month. Forecast Table is for mid-market rates, and subject to change anytime.
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By Writer | September 22, 2021 | Monthly Canadian Dollar Outlook/Forecast | 0 comments