CAD

Good morning. The almighty greenback is struggling to climb off a four-year low after US president Donald Trump said he didn’t think it had fallen too far, remarking that he could make it “go up or go down like a yo-yo,” but that it’s “doing great”—comments widely read as an endorsement of further weakness. A softer dollar could support US exports and raise import prices*, consistent with Trump’s aim of narrowing trade deficits, but it also risks generating market dislocations and raising borrowing costs if real-money investors redirect capital elsewhere. Treasury yields are holding firm, equity futures are setting up...

Foreign exchange markets are enjoying a brief period of respite, with most major pairs showing signs of mean reversion after the weekend’s sharp moves. The dollar is edging higher and measures of currency volatility are easing, even after President Trump issued fresh tariff threats against South Korea following similar warnings to Canada and Europe last week. Few expect the threats to be carried out, and many think the Supreme Court will place limits on such unilateral actions within the next month. Yield curves in Canada and the US are holding firm ahead of tomorrow’s central bank decisions, suggesting that investors...