May 9, 2022
Loonie falls to lowest level since 2020 as greenback rises
BNN Bloomberg
,BoC won't be able to raise rates as much as the Fed, negatively impacting the loonie: Strategist
The Canadian dollar came under renewed pressure Monday, falling below 77 cent U.S., the lowest level since November 2020.
The decline comes amid broad U.S. dollar strength, as a flight to safe-haven assets helped drive investors towards the greenback.
In a note to clients, Scotiabank Chief FX Strategist Shaun Osborne said that rising bond yields south of the border were broadly supportive to U.S. dollar strength, thus weakening other currencies including the Canadian dollar.
“The USD retains a strong undertone, leaving the [U.S. dollar index] well supported and pressuring the level that has served as a cap on gains (roughly) over the past week,” he said.
“Dollar drivers remain 1) rising yields, with the U.S. 10-year reaching 3.20 per cent, which in turn is pressuring 2) weaker stocks while 3) a weaker [yuan] amid China’s continuing COVID-zero lockdown is also serving to lift the USD versus Asia FX.”
Overall, The U.S. dollar has outperformed every G10 currency year-to-date, with the Canadian dollar holding in with a decline of 2.9 per cent. The Japanese Yen has been the worst performer among G10 currencies, losing 11.7 per cent of its value against the greenback.