Canadian Dollar Rally Loses Steam Amid US Treasury Intervention
The Canadian dollar has been showing signs of weakness as its rally may be running out of steam. The prospect of a Canada-US trade agreement has not contributed to the selling pressure, but rather the US Treasury's intervention in the long bond market.
The US Treasury doubled the size of its 10-to-30-year bond buybacks, citing improved liquidity in less actively traded sectors as the reason. However, investors were skeptical and interpreted this move as an attempt by the Treasury to exert greater influence over US interest rates.
The move has made alternatives to US investments more appealing, with gold and cryptocurrency prices surging. The Canadian dollar's firmness is also attributed to Canada and the US being close to a trade deal, but it is unclear whether this will have any significant impact on the currency's value.