After rising sharply last week, the Canadian dollar is slightly stronger today. The currency was flat against most peers yesterday and is modestly stronger this morning. This week, the currency is moving in the opposite direction of WTI crude (which is selling off). Wednesday is the big day for the loonie given the upcoming BOC rate decision and statement. We'll also see EIA crude oil inventories and production figures on Wednesday. Following last week's OPEC event, markets will be looking for lower crude oil stocks (despite production which remains in record territory). Later this morning, we will upgrade our short-term outlook on the currency to neutral. Our medium-term outlook remains bearish.
The USD/CAD exchange rate is currently above 1.2660. The euro is down against the Canadian dollar. EUR/CAD is currently above 1.50. Lastly, the pound is down against the Canadian dollar, with GBP/CAD trading above 1.6950.
Given an upcoming BOC rate decision, this is an important week for Canadian economic data and events. Later today, we’ll see trade figures. On Wednesday we’ll get a rate decision and a statement. On Thursday we’ll get the Ivey Purchasing Managers Index. On Friday we’ll see housing starts. Last week, Canadian GDP figures beat expectations helping the CAD rally.
As the Canadian dollar strengthens on better GDP data, we are upgrading the currency to neutral in the short-term. Looking at various technical indicators on a daily chart of the Canadian dollar, the currency is now trading within normal conditions.
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.