If you told me that stocks had taken a shovel to the face today, I wouldn’t have bet on Canadian dollar strength but the loonie is the best performer today. And that’s despite weakness in oil and some other commodities.

A few reasons:

  1. Better US growth numbers yesterday are great news for the US’s largest trading partner
  2. The Fed remained dovish and that’s negative for the US dollar
  3. Canada has some cred as a safe haven. The BOC is the most-neutral G7 central bank, the financial system is strong and government finances good
  4. The loonie is coming off a tough week. Over the past 5 days, USD/CAD rose 200 pips so a 10 pip rebound is hardly notable in the bigger picture
  5. Month-end oil flows could be giving the loonie a lift
  6. Canada’s May GDP today was close to expectations +0.4% m/m

Add it all up and there still isn’t much there but it’s enough to underpin the Canadian dollar. Looking ahead, however, the pair has very little stopping it from a test of the June high.

USDCAD daily

USDCAD daily with 100 dma