“Recession risks are building … We’re starting to see them more and more priced into markets,” said Jay Zhao-Murray, market analyst at Monex Canada Inc.
“It’s the broad risk-off that’s going to drive USD and it’s a bit more of a USD story that’s moving dollar-CAD.”
As supply shortages are exacerbated by the conflict in the Ukraine and COVID-19 lockdowns in China, economists have recently lowered their predictions for global economic growth. This makes it more probable that central banks would raise interest rates aggressively to combat rising inflation.
One of Canada’s main exports – oil – has declined roughly $25 in recent weeks, returning to under $100 per barrel, and the country’s stock market for commodities has down 15% from its record high in March.
As a result of strong gains versus the euro this week, the U.S. dollar has this week reached 20-year highs against a basket of other currencies.
