The Canadian dollar is mostly flat today. The currency is flat against the US dollar, and the euro. On the other hand, the currency is strengthening against the British pound (following worse-than-expected UK employment figures). Yesterday, the currency registered gains against the US dollar and the yen, while selling off against the British pound.
Turning to recent news, the outlook for NAFTA negotiations remains unclear. On one hand, Canadian Prime Minister Trudeau and US Vice President Pence both signaled optimism for a quick resolution (as we wrote yesterday). On the other hand, issues such as regional content rules for the automotive industry remain contentious. According to a recent Reuters report, Mexican Economy Minister Guajardo is pushing for a trilateral meeting this Thursday in order to discuss pending issues. When asked to comment on a deal, Guajardo said "I think you need to be alert that if there’s going to be rabbit for the stew, it’s going to be at the end of April." Our short-term outlook on the Canadian dollar is bullish, while our medium-term outlook remains neutral.
The USD/CAD exchange rate is currently above 1.2560. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5560. The pound is down slightly against the Canadian dollar, with GBP/CAD trading above 1.80.
This is a significant week for economic data and events relating to the Canadian dollar, thanks to an upcoming rate hike decision. Tomorrow 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.