There isn't anything in the market backdrop or fundamental picture to point to Canadian dollar strength today but it's the best performing major currency.
Oil was stronger earlier but it's down $1.80 to $106.89 now and the S&P 500 is 47 points lower.
I suspect the answer lies in the chart. USD/CAD tried to bust out of the 2022 range on Tuesday as it rose to a three-month high but it couldn't sustain the rally and fell over the past two days.
The loonie is in a strange position where it stands to benefit from higher commodity prices (Canada sells virtually everything Russia does) but is also being dogged by risk aversion. Furthermore, the Canadian housing bubble is extremely vulnerable to rising interest rates and I'm starting to see signs of a softening in housing demand.
I think this pair ultimately heads lower from here but it won't really get moving until things are clearer in Ukraine and Russia.
