US Dollar to Canadian Dollar Exchange Rate Climbs Above 1.3800 as Bank of Canada Maintains Steady Policy and Markets Bet on Hawkish US Federal Reserve

The US dollar to Canadian dollar exchange rate has been on a steady climb in recent weeks, reaching a high of 1.3800 on April 15th, 2021. This marks the highest exchange rate since October 2018, and is a significant increase from the 1.3000 rate seen in March. The rise in the exchange rate is largely attributed to the Bank of Canada’s steady policy and the markets betting on a hawkish US Federal Reserve.

The Bank of Canada has kept its policy steady since the start of the pandemic, with its benchmark interest rate remaining at 0.25%. This has led to a weaker Canadian dollar, as investors have sought out higher-yielding assets. At the same time, the US Federal Reserve has kept its benchmark interest rate at 0.25%, but has indicated that it may begin to raise rates later this year. This has led to investors betting on a hawkish US Federal Reserve, which has caused the US dollar to strengthen against the Canadian dollar.

The rising US dollar to Canadian dollar exchange rate is beneficial for US exporters, as it makes their goods more competitively priced in Canada. It is also beneficial for Canadians travelling to the United States, as their money goes further when converted into US dollars. On the other hand, Canadian exporters may find it more difficult to compete in the US market, as their goods become more expensive for American consumers.

The Bank of Canada is expected to keep its policy steady for the foreseeable future, while the US Federal Reserve is likely to begin raising rates later this year. This could lead to further strengthening of the US dollar against the Canadian dollar, as investors continue to bet on a hawkish US Federal Reserve.

Overall, the US dollar to Canadian dollar exchange rate has been steadily climbing since March, reaching a high of 1.3800 on April 15th, 2021. This is largely attributed to the Bank of Canada’s steady policy and the markets betting on a hawkish US Federal Reserve. While this is beneficial for US exporters and Canadians travelling to the United States, it could be detrimental for Canadian exporters competing in the US market. The Bank of Canada is expected to keep its policy steady for the foreseeable future, while the US Federal Reserve is likely to begin raising rates later this year. This could lead to further strengthening of the US dollar against the Canadian dollar.

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• Source: Plato Data Intelligence: PlatoAiStream