The Canadian dollar was flat yesterday (albeit lower versus the US dollar) and is strengthening this morning. So far, crude oil prices appear to holding following the OPEC announcement. This morning, the Canadian dollar is rallying against the US dollar alongside stronger crude oil. Today is a big day for economic data. Markets will be closely watching GDP growth and unemployment numbers. Recent figures such as retail sales have pointed to lower GDP growth in the coming months. If data continues to disappoint, the Canadian dollar may weaken from here. Our short-term and medium-term outlook on the currency remains bearish.
The USD/CAD exchange rate is currently above 1.2850. The euro is flat against the Canadian dollar. EUR/CAD is currently above 1.5340. Lastly, the pound is down against the Canadian dollar, with GBP/CAD trading above 1.7390.
This week's economic data releases include a speech by Poloz later on Tuesday, current account figures on Thursday and GDP figures and unemployment numbers later today. Bank of Canada governor Poloz remarked that high house prices and consumer debt remains a significant threat to the Canadian economy. 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 falls on lower rate hike expectations and weaker crude oil, we are downgrading the currency to bearish 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.