The Canadian dollar is mostly weaker today. The currency is selling off against all major currencies except the US dollar, and is the weakest against the euro and the British pound. Last week, the Canadian dollar registered significant gains (particularly against the US dollar), as crude oil prices surged and a resolution to the NAFTA discussions became more likely.
Looking at the currency today, the loonie is giving up some of its gains as crude oil prices fall from recent highs. As we wrote in our US dollar daily update, an escalation of the military conflict in Syria is looking less likely (helping crude prices weaken). Turning to NAFTA news, US Vice President Pence and Canada's Prime Minister Trudeau have both said that a deal could be reached within weeks. Both Pence and Trudeau made the remarks at the recent Summit of the Americas in Lima, Peru. Last week, Trump threatened to negotiate on NAFTA "forever" unless Canada and Mexico were willing to make concessions. Later today, we will upgrade our short-term outlook on the Canadian dollar to bullish, and our medium-term outlook to neutral.
The USD/CAD exchange rate is currently above 1.260. The euro is up against the Canadian dollar, with EUR/CAD currently above 1.5570. The pound is up slightly against the Canadian dollar, with GBP/CAD trading above 1.7970.
This is a significant week for economic data and events relating to the Canadian dollar, thanks to an upcoming rate hike decision. Wednesday is the most important day, and we’ll see the Bank of Canada’s decision on interest rates, as well as the Bank’s Monetary Policy Report. We’ll also hear Governor Poloz speak at a press conference. On Thursday, we’ll see ADP employment changes for March. On Friday, we’ll see both YoY retail sales for February as well as the YoY consumer price index for March. Last week, the BoC business outlook survey suggested that Canadian businesses are optimistic regarding future revenues.