The Canadian dollar continues to climb higher this morning after strengthening through the holiday season. This morning, the currency is being helped by both broad US dollar weakness and rising crude oil prices. The US dollar has been very weak in recent days thanks to abundant USD liquidity. Looking at crude oil prices, while both WTI and Brent are at bullish extremes (based on technical indicators and speculator sentiment on futures exchanges) prices continue to climb higher. The Canadian dollar is also approaching bullish extremes based on technical indicators, but remains out of the danger zone for now. Later this week, unemployment data will provide clarity regarding the health of the underlying economy.
The USD/CAD exchange rate is currently above 1.2520. The euro is up against the Canadian dollar, with EUR/CAD currently above 1.50. The pound is also up against the Canadian dollar, with GBP/CAD trading above 1.690.
This week's economic data releases relating to the currency includes unemployment data and trade balances. Later today, we'll see Markit manufacturing PMIs. Friday is the big day, and we'll see unemployment, changes in employment as well as trade balances. We'll also see Ivey PMIs for December on that day. Prior to the holidays, October GDP growth data missed expectations by a wide margin.
As the Canadian dollar rallies on US dollar weakness on stronger crude oil prices, 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.