The Canadian dollar is slightly weaker this morning after trading sideways last Friday. The currency appears to be tracking crude oil prices today. WTI crude is pulling back after breaching overbought conditions last week. Given Canadian dollar weakness, we are now neutral on USD/CAD in the short-term and expect the pair to keep trading sideways. Looking at news, this is a particularly light week for economic announcements. Friday is the most important day, and will include inflation figures. Last month, consumer price index figures came in at 1.6%, below the Bank of Canada's target inflation midpoint of 2 percent.
The USD/CAD exchange rate is currently below 1.270. The euro has been flat against the Canadian dollar. EUR/CAD is currently above 1.4780. Lastly, the pound is down against the Canadian dollar, with GBP/CAD trading below 1.6630.
This is a fairly light week for Canadian economic releases. On Friday, we’ll see CPI and Core CPI numbers. Last week, housing starts and new build permits beat expectations while the Bank of Canada remained “cautious” in its outlook for future rate hikes.
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.