The Canadian dollar was stronger yesterday and is trading sideways this morning. Better than expected wholesale trade numbers helped the loonie yesterday. The Canadian dollar has also been supported by rising crude oil prices, despite ongoing disruptions in the Keystone XL pipeline after a recent spill. Last week, the currency sold off after poor manufacturing sales figures. We'll get inflation figures and retail sales numbers later today that is likely to drive trading action in the currency. Given rising commodity prices earlier in the year, November inflation figures are likely to be fairly strong. Our short-term and medium-term trending indicators on the Canadian dollar remains bearish.
The USD/CAD exchange rate is currently above 1.2830. The euro is flat against the Canadian dollar. EUR/CAD is currently above 1.5240. Lastly, the pound is flat 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. Later today, 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 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.