July Currency Matters.pdf

Because economic growth is stronger in the US, US interest rates are rising relative to Canadian rates
and this favours the US dollar…
Weekly CAD=, US2YT=RR, CA2YT=RR
Value BarOHLC, CAD=, Bid, 03/07/2015, 1.2341, 1.2412, 1.2302, 1.2376, +0.0060, (+0.49%),
0.25 Spread, US2YT=RR, Bid Yield(Last), CA2YT=RR, Bid Yield(Last), 1.0, 1.0, 03/07/2015, 0.0746

06/12/2013 - 31/07/2015 (GMT)
Price
/USD
1.28

0.2

1.27

0.15

1.26

0.1
0.0746
0.05

1.25
1.24
1.2376

Weekly USDCAD

0

1.23

-0.05

1.22

-0.1

1.21

-0.15

1.2
1.19

-0.2

1.18

-0.25

1.17

-0.3

1.16

-0.35

1.15

-0.4

1.14

-0.45

1.13

-0.5

1.12

USDCAD 2Y IRD

-0.55

1.11

-0.6

1.1

-0.65

1.09

-0.7

1.08
1.07

-0.75

1.06
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If the capital markets become unsettled because of fallout from Greece or other high risk events, US
interest rates could fall and the dollar rise in a flight to safety play. There is not always a positive
correlation between interest rate differentials and exchange rates; it depends on why interest rates are
rising or falling.