Forex
Dollar Continues Post-Fed Rally as Yields Climb and Trade Tensions Rise
The US dollar continues to gain strength in the wake of the Federal Reserve's latest move. The Canadian dollar has logged its ninth consecutive decline, pushing USD/CAD above 1.41 as the spread between US and Canada two-year yields widened to a 2026 high.
Elsewhere, the euro is experiencing a challenging month, down around 2% this month as higher US yields outweigh signs of resilience in eurozone sentiment and activity indicators. The Mexican peso was one of the week's worst-performing currencies, with USD/MXN rising nearly 2.5% as its carry advantage over the dollar narrowed.
US-Canada trade developments and the energy shock will shape next week's dollar outlook through their impact on inflation expectations, bond yields, and risk appetite.