USD/CAD adds to gains in fresh 22-month high

The Queen’s funeral is a holiday in most of Canada today but markets are open and I assume that desks are staffed so liquidity in USD/CAD should be fine.

The pair is under pressure today as oil and gas prices decline. WTI crude is down 3% and natural gas down 2.5%. Combine that with poor risk sentiment and USD/CAD is at the highs of the day, up 75 pips to 1.3336. That’s the highest since November 2020.

I spoke with the CBC on Friday about the loonie and continue to see it rising to 1.37 (73-cents in CAD/USD terms).There is some resistance at 1.3400-1.3433 but right now the momentum is higher.

If there is a turn in the loonie it will come with a broad reversal in markets. Until we get a nod from the Fed that it’s at least slowing down the pace of hikes and seeing some relief on inflation, it will be tough to turn around.