The Canadian dollar remains flat against most of its global peers, and is looking fairly oversold against the US dollar. While there has been limited relevant news from Canada in the past few days, the currency remains weak thanks to falling rate hike expectations, poor economic data and uncertainty thanks to the ongoing NAFTA negotiations. Despite the ongoing crude oil rally, the Canadian dollar has failed to benefit from strength in commodities.
The USD/CAD exchange rate is currently above 1.2830. The euro is flat against the Canadian dollar today, with EUR/CAD above 1.4940. Lastly, the pound is up against the Canadian dollar, with GBP/CAD trading above 1.6950.
This week has a few important events on the calendar. Later today, we’ll see monthly GDP figures for August. Given the ongoing deceleration in growth, expectations for economic growth have been falling. On Wednesday, we’ll get Markit manufacturing PMIs. Finally, on Friday we’ll get the trade balance and unemployment numbers. Last week, the BoC maintained interest rates and expressed its “caution” regarding future rate hikes.
After weakening in the latter half of October, we are now bearish on the medium-term outlook for the Canadian dollar. The currency is selling off on weak economic data and lower interest rate hike expectations. 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.