The Canadian dollar is currently selling off against all major currencies. Last week, the Canadian dollar moved up sharply against its US counterpart. On a week-over-week basis, trading volumes in Canadian dollar futures were lower, albeit to a fairly small degree. Thanks to improving trends in price, trading volumes and volatility, we will upgrade our outlook on the loonie to bullish later today. Today's USD/CAD trading range is 1.290 - 1.3240.
Looking at last week's economic data, headline inflation weakened relative to the previous month by a significant degree. Going forward, future inflation will face increasingly challenging base effects. As a result, the outlook for inflation today is less benign. Following a significant jump in year-over-year inflation this year, the Bank of Canada is expected to raise interest rates. While inflation is more likely to decelerate, strong retail sales growth suggests continued strength in GDP growth. While retail sales in July slowed compared to the previous month, June retail sales were revised up by a significant degree. Given the importance of consumption, this bodes well for Canada's GDP growth in July (to be released later this week).
Turning to NAFTA, Canadian Prime Minister Justin Trudeau told reporters that senior-level NAFTA talks were "very likely" to happen. Canadian Foreign Minister Chrystia Freeland and other senior officials are attending a UN General Assembly event scheduled this week. According to a CBC story, informal talks are likely to occur. Our outlook on the Canadian dollar is now bullish.
The USD/CAD exchange rate is currently above 1.2940. The euro is up against the Canadian dollar, with EUR/CAD currently above 1.5230. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.70. CAD/JPY is down slightly, and currently trading above 86.90.
|September 21||Core Inflation Rate YoY AUG||1.7%||1.6%|
|September 21||Inflation Rate YoY AUG||2.8%||3%|
|September 21||Retail Sales YoY JUL||3.7%||4.0%|
|September 24||Wholesale Sales MoM JUL||-0.8%|
|September 27||BoC Gov Poloz Speech|
|September 28||Raw Materials Prices YoY AUG||22%|
|September 28||GDP MoM JUL||0%|
|September 28||PPI YoY AUG||6.6%|
|September 28||Budget Balance JUL||C$1.1B|