The Canadian dollar is slightly stronger this morning, particularly against the US dollar. USD has been selling off due to concerns regarding this week's Senate tax vote and a weak outlook for inflation. On the other hand, the Canadian dollar has been supported by rising WTI crude prices. Looking at domestic data, the currency has mostly sold off following weakness in retail sales and inflation. After strengthening at the end of last week, we are upgrading our short-term outlook on CAD to bullish. Our medium-term outlook remains neutral.
The USD/CAD exchange rate is currently below 1.270. The euro is flat against the Canadian dollar. EUR/CAD is currently above 1.5150. Lastly, the pound is up against the Canadian dollar, with GBP/CAD trading above 1.6940.
This week's economic data releases include a speech by Poloz on Tuesday, current account figures on Thursday and GDP figures and unemployment numbers on Friday. Given Poloz's repeated stance of staying "cautious" with regards to future rate hikes, his upcoming speech is unlikely to contain any big new surprises. GDP figures will be watched closely as recent economic data suggests that Canadian growth is slowing. Last week, CAD sold off following weak retail sales estimates.
As the Canadian dollar benefits from strong crude prices, we are upgrading the currency to neutral 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.