The Canadian dollar is once again flat this morning. While the loonie was weaker earlier in the day, the currency has since made up its losses. Despite the ongoing crude oil rally, the Canadian dollar has been weighed down by slowing economic growth. In a recent commentary on the long-term outlook for the Canadian dollar, we argued that most drivers that supported the currency in the past are now weighing against it. While the loonie may rally against the US dollar in the short-term (particularly if the upcoming Senate tax bill fails), the longer-term outlook for the currency is cloudy.
The USD/CAD exchange rate is currently above 1.2760. The euro is up against the Canadian dollar. EUR/CAD is currently above 1.5050. Lastly, the pound is up against the Canadian dollar, with GBP/CAD trading above 1.6930.
This is a fairly light week for the Canadian dollar in terms of economic data releases. On Wednesday, we’ll see the Federal government budget balance. On Thursday, we’ll see retail sales for September. Last week, the Canadian dollar sold off after meeting CPI estimates.
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.