The Canadian dollar is weakening today, after strengthening for the last four trading sessions. We continue to believe that the Canadian dollar is oversold in the short-term, although the currency is looking less oversold in the past 24 hours. Ivey PMIs announced yesterday were higher than the previous figures. Despite the good survey numbers, growth in Canada peaked last summer and has been declining in rate-of-change terms. In other news, crude oil continues to make new highs for the year and should offer some support to the currency. Our medium-term outlook on the Canadian dollar is neutral.
The USD/CAD exchange rate is currently above 1.2750. The euro fell against the Canadian dollar yesterday, and is flat today. EUR/CAD is currently above 1.4750. Lastly, the pound is up against the Canadian dollar, with GBP/CAD trading above 1.6760.
Beyond a Bank of Canada speech and press event, this is a pretty light week for the Canadian dollar economic calendar. On Monday, Ivey PMIs were higher than the last print (63.8 vs. 59.6 prior). On Wednesday, Governor Poloz will give a speech in Montreal followed by a press conference. We’ll also see October housing starts and build permits on Wednesday. Finally on Thursday, we’ll see the New Housing Price Index for September. Last week, trade balance figures and unemployment numbers missed expectations.
As the Canadian dollar rebounds thanks to strengthening crude oil prices, we are now neutral on the currency in the medium-term. Looking at a weekly chart, the currency is trading within normal conditions. This is based on various technical indicators on the Canadian dollar currency index.