The Canadian dollar is mostly mixed today. The loonie is currently slightly higher against the euro and the British pound, and falling against the yen. The Canadian dollar is flat against the US dollar. As we wrote in our US dollar daily update earlier today, USD is sharply higher thanks to Federal Reserve Chair Jerome Powell's upbeat growth outlook. Following his testimony to Congress yesterday, the US dollar rose while riskier assets such as equities and commodities sold off. As a commodity currency, the Canadian dollar weakened alongside crude oil prices and other commodities. As we have written before, the performance of the Canadian dollar remains fairly disappointing. While the US dollar is only slightly higher (on a trade-weighted basis) since early February, the Canadian dollar continues to weaken. Turning to the latest NAFTA news, House Republicans asked President Trump to complete NAFTA negotiations and avoid unilaterally imposing tarrifs on trading partners. According to The Hill, many Republicans in Congress oppose ending NAFTA entirely. Yesterday, we downgraded our short-term outlook on the currency to bearish and our medium-term outlook to neutral.
The USD/CAD exchange rate is currently above 1.270. The euro is down against the Canadian dollar, with EUR/CAD currently above 1.5580. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.7730.
This is a fairly light week for Canadian economic data. Later today, we'll see the raw material price index. On Thursday, we'll see the current account and Markit manufacturing PMIs. On Friday, we'll see December GDP figures. The GDP numbers will be watched closely following disappointing December retail sales numbers last week.