The Canadian dollar is currently mixed. CAD is weakening against the US dollar and the British pound, while making gains versus the Japanese yen and the Australian dollar. Yesterday, the loonie managed to end the day slightly higher against the US dollar. Unfortunately, the currency has given up yesterday's gains thanks to the ongoing US dollar rebound.
Turning to recent news, Reuters is reporting that a Mexican business leader has claimed that a new NAFTA deal could be reached in 10 days. Moises Kalach made the statements yesterday. He is the current head of the CCE business lobby, which represents Mexico's private sector in the NAFTA negotiations. With NAFTA looking more and more like a done deal, news headlines relating to NAFTA are having a limited impact on the Canadian dollar. Instead, the currency is trading primarily as a function of recent US dollar strength. As global growth decelerates, rising US bond yields are making the US dollar a more attractive investment destination relative to the loonie. The Canadian dollar is selling off as a result.
While we upgraded our outlook on the Canadian dollar to neutral earlier this week, recent weakness means that the broader trend is looking bearish again. Later today, we will downgrade our short-term outlook to bearish. We expect to downgrade our medium-term outlook back to bearish later this week or next week.
The USD/CAD exchange rate is currently above 1.2850. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5690. The pound is up slightly against the Canadian dollar, with GBP/CAD trading above 1.7940.
This is a very light week for economic data relating to the Canadian dollar, as no significant data releases are scheduled for this week. Last week, the Bank of Canada maintained its existing interest rates, while suggesting that accommodative policies were set to continue.