The Canadian dollar is currently mixed. While CAD was higher at the outset of the day, the currency has weakened recently. The Canadian dollar is slightly lower against the US dollar, euro and British pound, while trading slightly higher against the Australian dollar. In general, movements in foreign exchange are relatively subdued as traders await the upcoming European Central Bank meeting as well as possible tariffs from President Trump. Yesterday, the White House claimed that Canada and Mexico will receive a 30-day exemption on steel and aluminum tariffs. According to White House Press Secretary Sarah Sanders, the exemption may be extended if NAFTA negotiations progress further. The Canadian dollar rallied on the news, although the currency has given up some of its gains today. In general, the loonie remains pressure thanks to trade fears and recent weakness in crude oil. As global risks sentiment turns more cautious, the Canadian dollar is weakening as a result. Our short-term and medium-term outlook remains bearish.
The USD/CAD exchange rate is currently above 1.2920. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.60. The pound is up slightly against the Canadian dollar, with GBP/CAD trading above 1.7940.
Looking at Canadian economic data, Ivey PMIs (59.6 vs. 56.3 expected) were ahead of consensus estimates. Merchandise trade (-$1.91b vs. -$2.50b expected) was also ahead of estimates. The Bank of Canada kept rates on hold, while outlining risks from ongoing trade negotiations. Later today, we'll see housing starts, building permits and the new housing price index. We'll also hear speeches from BoC members including Poloz and Lane. On Friday, we'll see changes in employment as well as the unemployment rate. Last week, December GDP growth missed estimates.