What’s going on here?
The Canadian dollar hit a two-month high against the US dollar, fueled by falling US bond yields and evolving investor strategies.
What does this mean?
The loonie, as many call it, appreciated by 0.5% to trade at 1.4235 per US dollar, a peak not reached since December 13. This upswing aligns with a decrease in US Treasury yields, which weakened the greenback against a mix of key currencies. A chief strategist at RBC Capital Markets noted that the USD-CAD rate’s drop past a critical support point triggered stops on long positions, giving the loonie a further lift. In tandem, unexpectedly low core PCE inflation signs from the US producer price report propelled this change. Meanwhile, former President Trump’s decision to delay 25% tariffs on Mexican and Canadian goods calmed markets, prompting investors to reassess expectations of a Bank of Canada rate cut, with the swaps market’s estimate for a March rate cut…
