The Canadian dollar is weaker this morning against the US dollar and the yen, while trading sideways against the euro and the British pound. The currency is mostly a victim of dollar and yen strength today. The US dollar is rebounding after looking oversold last week. The yen is strengthening thanks to a change in the Bank of Japan's operations we described in today's yen daily update. Any sell-off in the Canadian dollar should be limited by optimism for the Bank of Canada's upcoming meeting. Thanks to improving rate hike odds following strong jobs numbers, the Canadian dollar has been rallying in recent times. In longer-term, we expect the currency to be weighed down by a downturn in emerging markets and commodity prices. Our short-term trending indicator is currently bullish, while our medium-term outlook is neutral.
The USD/CAD exchange rate is currently above 1.2440. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.4850. The pound is down against the Canadian dollar, with GBP/CAD trading above 1.6830.
This is a very light week for economic data releases relating to the currency. The BoC's business outlook survey suggested improving business conditions on all metrics except future sales (+8 vs +19 previously). The report helps the Bank's case for a rate hike next week. Later today, we'll see housing starts. On Wednesday we'll see build permits. On Thursday, we'll get new housing price index numbers. Last week, changes in employment were significantly ahead of expectations.
As the Canadian dollar strengthens on higher crude oil prices and rate hike hopes, we are upgrading the currency to bullish 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.