The Canadian dollar is mostly stronger this morning, particularly against the US dollar and the British pound. The US dollar is losing steam after rising sharply yesterday. While USD rose alongside sharply higher US bond yields yesterday, today US bond yields are falling, leading to weakness in the currency. Looking at recent economic data, Canadian housing starts were ahead of forecasts. We'll see building permits later today. While Canadian GDP figures have disappointed in recent history, strong jobs growth and improving sentiment surveys point to a positive outlook. As the Bank of Canada is widely expected to raise rates next week, the currency should remain supported by monetary policy expectations. Our short-term trending indicator is currently bullish, while our medium-term outlook is neutral.
The USD/CAD exchange rate is currently above 1.2450. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.4860. The pound is down against the Canadian dollar, with GBP/CAD trading above 1.680.
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. Housing starts beat expectations (217k vs. 212.5k expected). Later today, 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 rallies on rate hike hopes, we are upgrading the currency to bullish in the short-term. Looking at various technical indicators on a daily chart of the Canadian dollar, the currency is now trading within a normal range.
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.