The Canadian dollar is higher this morning, and is especially strong against safe havens such as the Japanese yen and the US dollar. As crude oil prices remain at multi-year highs (benchmarks are currently trading at the best levels since late 2014), the currency remains supported by commodity prices. The loonie is also benefiting from general USD weakness. The US dollar index (a measure of the US dollar against six major global currencies) has been selling off this morning. As we wrote earlier, hopes for a rate hike at the next Bank of Canada meeting on January 17 should keep the currency supported. While Canadian GDP growth has been slowing since last summer, the global growth story remains strong. Upcoming employment numbers should provide further cues regarding the direction of Canada's economy. Our medium-term outlook on the currency remains bearish.
The USD/CAD exchange rate is currently above 1.2520. The euro is up slightly against the Canadian dollar, with EUR/CAD currently above 1.5060. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.69.
This week's economic data releases relating to the currency includes unemployment data and trade balances. Markit manufacturing PMIs were higher than the previous print (54.7 vs. 54.4 prior). Friday is the big day, and we'll see unemployment, changes in employment as well as trade balances. We'll also see Ivey PMIs for December on that day. Prior to the holidays, October GDP growth data missed expectations by a wide margin.