The Canadian dollar is currently mixed. The loonie is strengthening against the British pound and the euro, while selling off against the US dollar. Yesterday, the Canadian dollar rebounded following a sharp sell-off earlier in the week. Note that the recent move up has been accompanied by relatively weaker trading volumes - a sign that bulls are not buying the currency with conviction. Today's USD/CAD trading range is 1.3070 - 1.3390.
While the Bank of Canada surprised many by both raising interest rates and delivering an upbeat assessment of growth and inflation this week, the Canadian dollar has been selling off. The combination of slowing Canadian growth (especially relative to accelerating US growth), falling crude oil prices and worsening global trade tensions are all taking their toll on the currency. Despite recent weakness, the loonie remains supported by relatively high crude oil prices (we currently have a bullish outlook on the commodity). If and when crude oil enters a bearish trend, expect the Canadian dollar sell-off to worsen accordingly.
Looking at economic data, new house prices in May decelerated in rate-of-change terms. Given the historical run-up in Canadian house prices, house price data tends to be have an outsized impact on Canadian financial assets. Our outlook on the Canadian dollar remains bearish.
The USD/CAD exchange rate is currently above 1.3170. The euro is down slightly against the Canadian dollar, with EUR/CAD currently above 1.5330. The pound is down against the Canadian dollar, with GBP/CAD trading above 1.7310. CAD/JPY is flat, and currently trading above 85.50.
|July 10||Housing Starts JUN||248.1K||195.6K|
|July 10||Building Permits MoM MAY||4.7%||-4.7%|
|July 11||BoC Monetary Policy Report|
|July 11||BoC Interest Rate Decision||1.5%||1.25%|
|July 11||BoC Press Conference|
|July 12||New Housing Price Index YoY MAY||0.9%||1.6%|