The Canadian dollar is selling off for the sixth trading session in a row today. CAD is currently the weakest against the Japanese yen, the US dollar and the British pound. While WTI (crude oil) prices are only slightly lower today, the Canadian dollar remains a victim of souring risk sentiment and fears of a trade war. Looking at other markets, other commodity currencies including the Australian dollar and the Norwegian krone are also selling off.
Turning to the latest NAFTA news, there is some hope that the US may accept Canadian ideas for meeting US content rules. According to CTV News, US Trade Representative Lighthizer publicly claimed that there is hope that a new NAFTA deal can be agreed upon before the next Congress in January 2019. Canadian officials believe that a deal can be concluded quickly if the US drops many of its demands. Improving the trade balance in autos is significant area of concern for the Trump administration. The US is also looking for concessions relating to Canada's supply management system which limits imports of milk, cheese and poultry. Our short-term and medium-term outlook remains bearish.
The USD/CAD exchange rate is currently above 1.310. The euro is up against the Canadian dollar, with EUR/CAD currently above 1.610. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.8290.
This is a relatively light week for Canadian economic data. Tomorrow, we'll see wholesale sales. On Thursday, the Bank of Canada's Wilkins will deliver a speech. Friday is the most important day, and we'll get both retail sales and the consumer price index. Consensus estimates are calling for headline inflation to decelerate to 1.6% year-over-year in February. Last week, year-over-year home sales and house prices were both at multi-year lows.