The U.S. dollar saw quite a comeback yesterday for a number of reasons. Among the most significant were comments from the European Central Bank, which announced that it planned to extend its asset buyback program, a sign that the economy is far from firing on all cylinders. Another was the budget resolution passed by the United States Congress to relaunch the tax reform process. In addition to providing support for the greenback, this news delighted European and North American stock exchanges.
Needless to say, our dollar was unable to hold steady against the strength of the USD, especially since Bank of Canada Governor Stephen Poloz stated that many things would have to align before another rate hike. However, in June the situation was completely different and almost alarming.
As to how far the greenback can climb, we will have part of the answer at 8:30 this morning when the first reading of U.S. Q3 GDP is released. For the moment, the U.S. Dollar Index (DXY), which measures the performance of the USD against a basket of currencies is at a three-month high, while the loonie is revisiting levels seen in early July.
Stéphane Goulet
Range of the day: 1.2790 – 1.2950
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