The airport and metro system in Brussels were hit overnight by terrorist attacks that left at least 21 dead. These attacks impacted the euro, which is down against most major currencies. The loonie lost close to 1% on the news before rallying to make up the lost ground.
The CAD was down yesterday, despite rising stock markets and crude oil. Comments from Atlanta Fed President Denis Lockhart and San Francisco Fed President John Williams hinting at a rate hike as soon as the next FOMC meeting on April 26 and 27 gave a shot in the arm to the greenback and U.S. bond yields.
Since February 25, we have seen a major divergence between the interest rate differential (U.S.- CDN) and the exchange rate. While the rate differential has widened since then, the Canadian dollar has gained more than 3%, whereas in a normal market context, a widening spread should have weighed down our dollar.
