The Canadian dollar is lower against all major currencies (except the Australian dollar) today. While CAD was higher at the start of the day yesterday, the currency began selling off once the US dollar began strengthening. Today, the Canadian dollar continues to weaken alongside most commodities and "risk-on" currencies. On the other hand, the US dollar is broadly stronger today.
Turning to the latest NAFTA news, the US has offered to reward jurisdictions that offer higher wages to auto workers. While many media outlets reported that the US dropped its push for minimum US auto content last week, the latest news suggests that the US is looking for innovative ways to reduce the harm to US workers from trade. According to the CBC, a publication called Inside U.S. Trade first reported that the US was demanding a minimum wage of $15/hour. According to US Trade Representative Lighthizer, "the objective is to try to get wages up in Mexico — which makes the United States more competitive, but also creates customers for the United States". Our medium-term outlook remains bearish. We will upgrade our short-term outlook to neutral later today.
The USD/CAD exchange rate is currently above 1.2890. The euro is up slightly against the Canadian dollar, with EUR/CAD currently above 1.5980. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.8270.
This is a relatively light week for Canadian economic data. We'll see GDP figures for January on Thursday. Last week, year-over-year inflation was higher than expectations.