The Canadian dollar is currently flat after weakening last Friday following poor manufacturing sales figures. The US dollar rose on increasing expectations for tax reforms. This week, traders will be focused on inflation numbers on Thursday and GDP figures this Friday. As speculators continue to maintain large long positions in the Canadian dollar, there is a risk of a reversal if inflation and growth come in below expectations. In other news, crude oil prices remain strong and have provided support for the loonie in recent history. Our short-term and medium-term outlook on the Canadian dollar remains bearish.
The USD/CAD exchange rate is currently above 1.2860. The euro is up against the Canadian dollar. EUR/CAD is currently above 1.5140. Lastly, the pound is up against the Canadian dollar, with GBP/CAD trading above 1.7170.
This week’s economic data and events relating to the Canadian dollar include inflation and GDP growth. On Thursday, we’ll get retail sales, November headline CPI and core CPI. On Friday, we’ll see October GDP growth. Last week, the Canadian dollar rallied after Poloz suggested that the economy had made “tremendous” progress.
As the Canadian dollar falls on US dollar strength, we are downgrading the currency to bearish 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.