The Canadian dollar is mostly weaker today. CAD is currently weakening against all currencies except the euro and the British pound. Yesterday, the loonie weakened against the US dollar, but made gains versus the euro following the latest ECB meeting. As we wrote in our euro daily update, the ECB failed to meet expectations regarding future monetary policy, sending the euro lower.
Turning to recent NAFTA news, Mexico’s Foreign Minister Luis Videgaray said that talks were "reasonably close". Trade ministers from the three NAFTA countries had met in Washington for the third consecutive day yesterday. According to a Reuters story, talks are scheduled to resume later today. While progress on agricultural access is expected, auto content remains a contentious topic. A group of Democratic lawmakers have also expressed their frustration regarding the lack of updates relating to the discussions. While U.S. Trade Representative Lighthizer was scheduled to meet lawmakers yesterday, he canceled given his lack of time.
Looking at the Canadian dollar in more detail, we will downgrade our medium-term outlook to bearish later today following recent weakness. As the US dollar is looking overbought in the short-term, the Canadian dollar is likely to enjoy a short-term relief rally. In the longer-term, the Canadian dollar is likely to suffer as the US dollar enters a bullish trend. While crude oil prices have been strong, the Canadian dollar is being weighed down by slowing growth and weaker expectations for rate hikes this year.
The USD/CAD exchange rate is currently above 1.2890. The euro is down slightly against the Canadian dollar, with EUR/CAD currently above 1.5560. The pound is down against the Canadian dollar, with GBP/CAD trading above 1.780.
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.