Oil rose strongly over the third quarter, yet the Canadian dollar ended it about where it started. Daily USD/CAD moves track changes in the gap between US and Canadian two-year yields far more closely than they track oil, so rate differentials are setting the currency. The relationship also depends on the window, because the currency strengthened in July and August and weakened in September.
This chart is presented for general informational purposes only and does not constitute financial, investment, tax, or legal advice. Figures reflect the source and period indicated and may no longer be current.
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The gap is the US Treasury two-year yield minus the Government of Canada two-year yield, and daily USD/CAD changes have moved with it over the quarter.
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Brent was the only one of the three to finish above its starting level, while the index and gold both fell.
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The Bank of Canada held its policy rate at 2.25% for a seventh straight time, yet Canadian yields rose as United States yields surged.
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The index fell for the month even though Brent crude gained and the Strait of Hormuz stayed shut, because rising United States bond yields outweighed oil and gold.
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