USD/CAD goes from the highs back to the lows
USD/CAD has done a U-turn in the past six days.
It touched the highest since early January on May 31 as the Mexican tariffs were announced but it's reversed completely since then, even with oil prices falling 10%. It's an impressive turnaround but the tariff story is turning into a uniquely-USD-negative event. All the talk of easing is also boosting risk assets, at least for the moment.
The S&P 500 has risen in four straight days and is up 4.3% in that time. It's been a remarkable run that started with Powell taking a more-dovish approach. It highlights that things like Fed fund futures pricing might not accurately reflect what's priced in stocks and FX markets. If so, the dollar could have further to fall.
As for this pair, keep a close eye on 1.3251. A break lower would clear the way for a fall to the lows of the year near 1.3100. But as we saw last week, a reversal is never out of the question.
Here were the catalysts today: