The Canadian dollar continues to strengthen today. The currency is stronger against most of its major global peers including the US dollar, the euro and the Japanese yen. Crude oil prices continue to rise, while the US dollar remains firmly in a bear market. The current economic environment remains supportive for the Canadian dollar, and the currency is strengthening as a result. Upcoming retail sales numbers later today may help the loonie strengthen further. In recent times, Canadian retail sales have been higher than consensus estimates. Looking at the latest NAFTA news, Canada is pushing for amendments to various US demands. In particular, the Canadian negotiating team has suggested changes to the 'sunset clause' (a requirement to renegotiate NAFTA every 5 years) as well as demands for higher auto content. Given the political nature of the process, the outcome for NAFTA remains fairly unclear. Our short-term and medium-term outlook on the currency remain bullish.
The USD/CAD exchange rate is currently above 1.2320. The euro is down against the Canadian dollar, with EUR/CAD currently above 1.5280. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.7580.
Looking at economic data this week, markets will be watching retail sales and inflation figures. Later today we'll get retail sales figures. On Friday we'll see inflation numbers. Last week, the Bank of Canada raised policy rates to 1.25%.
As the Canadian dollar strengthens, 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.