The Canadian dollar is looking mixed today, after falling sharply yesterday. The currency is up against the British pound, Australian dollar and Japanese yen. The loonie is slightly lower against the US dollar and the euro. Trading in the Canadian dollar is taking cues from commodity markets and NAFTA negotiations this week. Looking at WTI (crude oil) prices, the commodity has traded lower for the past two days. After peaking above $66/barrel in early February, it's latest peak was around $62.50. Crude oil is one of Canada's biggest exports, and this explains why the currency tends to track WTI prices fairly closely. Turning to NAFTA, negotiations have yet to bear fruit. According to a recent editorial in the Globe and Mail by former Canadian diplomat Lawrence Herman, the road ahead is likely to be long, slow and painful. Thanks to upcoming presidential elections in Mexico and midterm elections in the US, NAFTA negotiations may not conclude until 2019. Our short-term outlook on the Canadian dollar is neutral, while our medium-term outlook remains bullish.
The USD/CAD exchange rate is currently above 1.2650. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.560. The pound is down against the Canadian dollar, with GBP/CAD trading above 1.7640.
This is a fairly light week for Canadian economic data. On Thursday, we’ll see retail sales. Friday is the key day, and we’ll get the January consumer price index and core CPI. Last week, manufacturing sales missed estimates by a wide margin.