The Canadian dollar is much weaker today, thanks to both retail sales and CPI figures which missed expectations. The loonie is selling off against all major currencies including the US dollar and the euro. Retail sales came in at -0.7% (vs. expectations of 0.3%) while CPI was 1.6% (missing expectations of 1.7%). The loonie is once again above 1.25 against the US dollar. Earlier, the currency was supported by higher crude oil prices.
The USD/CAD exchange rate is currently just above 1.2560. The euro is also up versus the Canadian dollar this morning, with EUR/CAD above 1.4830. Lastly, the pound is also up against the Canadian dollar, with GBP/CAD trading b below 1.6550.
This is pretty light week for economic data from Canada. Monday's Bank of Canada’s Business Outlook Survey showed much lower growth expectations (0.86 current vs. 2.81 previous). Retail sales came in at -0.7% (vs. expectations of 0.3%) while CPI was 1.6% (missing expectations of 1.7%). Last week, housing data mostly disappointed, with new build permits and new house prices below expectations.
After a small rebound in the second week of October, we are now neutral on the medium-term outlook for the Canadian dollar. As recent news from Canada has been limited, the currency has done well primarily thanks to relative weakness in the US dollar. Earlier, the loonie was weakening on lower interest rate hike expectations following comments from the Bank of Canada. While the loonie was in overbought conditions in September, the currency has since re-entered normal trading conditions. This is based on various technical indicators on a weekly chart of the Canadian dollar currency index.