The Canadian dollar once again strengthened yesterday, and is trading flat this morning. After strengthening for the past two days, the currency is no longer in short-term oversold territory. We upgraded our short-term outlook on the currency to bullish yesterday. The Canadian dollar was particularly strong against the US dollar, which fell after the US Senate produced a version of the tax bill that differed significantly from the House tax bill. As markets lower their expectations of the bill getting through Congress, the US dollar is selling off as a result. The Canadian dollar has also been supported by stronger WTI crude prices in recent days, which increases the value of the country's exports. Stronger crude prices are likely to continue supporting the currency in the short-term.
The USD/CAD exchange rate is currently below 1.2680. The euro has been flat against the Canadian dollar. EUR/CAD is currently above 1.4750. Lastly, the pound is down against the Canadian dollar, with GBP/CAD trading below 1.6660.
Beyond a Bank of Canada speech and press event, this is a pretty light week for the Canadian dollar economic calendar. On Monday, Ivey PMIs were higher than the last print (63.8 vs. 59.6 prior). On Tuesday, Governor Poloz remained "cautious" in his outlook for future rate hikes in a speech in Montreal. October housing starts (222.8k vs. 210k expected) and build permits (3.8% vs. -0.2% expectations) were both strong. The New Housing Price Index for September met expectations (0.2% vs. 0.2% expected). Last week, trade balance figures and unemployment numbers missed expectations.