The Canadian dollar is mostly weaker today. CAD is currently selling off against the US dollar, the Japanese yen and the British pound, while making small gains versus the euro. Yesterday, the loonie ended the day slightly higher against the US dollar. As the US dollar continues to look overbought, we expect the currency to be fairly weak in the short-term.
Turning to recent news and economic updates, there are few noteworthy developments today. Yesterday's merchandise trade balance figures were worse than expected. The data usually has a limited impact on the loonie. There are no significant developments relating to NAFTA either. In the short-term, the Canadian dollar is trading primarily as a function of the US dollar and crude oil. As crude oil is weakening today while the US dollar is strengthening, the Canadian dollar is mostly weaker as a result. Our short-term and medium-term outlook on the Canadian dollar remains bearish.
The USD/CAD exchange rate is currently above 1.2860. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5390. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.7440.
Looking at this week’s economic calendar for the Canadian dollar, we’ll see Canadian GDP growth figures. Industrial prices (0.8% vs. 0.7% expected) and raw material prices for March (2.1% vs. 0.6% expected) were both ahead of expectations. MoM February GDP growth (0.4% vs. 0.3% expected) were ahead of expectations while Markit manufacturing PMIs for April (55.5 vs. 55.6 expected) were slightly below expectations. Comments from BoC Governor Poloz suggested no changes to monetary policy. The international merchandise trade balance for March (-$4.14b vs. -$2.24b expected) was below expectations. Later today, we’ll see Ivey PMIs for April. Last week, NAFTA talks continued to progress as the US softened its stance on auto content rules.