CAD Crashes to Two-Month Lows Amid Fed Hike Bets and Soaring US Yields
The Canadian Dollar (CAD) has dropped to fresh two-month lows against the US Dollar (USD), extending its losses for the fourth consecutive day on Thursday. This decline is largely due to rising bets of Federal Reserve rate hikes and higher US Treasury yields, which are pushing the Greenback across the board.
US Treasury yields have surged to their highest levels in over 20 years, with moderate risk aversion driving markets. Despite this, the positive impact of rebounding Oil prices on the CAD has been offset by these concerns. Crude Oil has shown a significant recovery, returning to the key $100 level, but US and Iran representatives failed to reach any relevant agreement at the United Nations General Assembly.
Strategists at Societe Generale note that the 10-year UST yield has crossed its 2023 peak of 5.02%, resulting in an extension of the uptrend. They acknowledge that this move appears somewhat stretched, but stress that signals of a meaningful pullback are not yet visible.