The Canadian dollar is rising today. Yesterday, the currency weakened against the US dollar following President Trump's comments at the World Economic Forum in Davos, Switzerland. Specifically, Trump stated that he supported a "strong dollar" and believed the currency would get "stronger and stronger". This morning, the US dollar has reversed its gains and is now weakening. The Canadian dollar is benefiting from rising commodity prices and optimism for global growth. Looking at recent economic data, while retail sales missed estimates, the ongoing bull market looks intact. Traders will be watching upcoming inflation data for further cues. Higher-than-expected inflation could cause the currency to strengthen further. Our short-term and medium-term outlook on the currency remain bullish.
The USD/CAD exchange rate is currently above 1.2460. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5350. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.7560.
Looking at economic data this week, markets will be watching retail sales and inflation figures. Retail sales missed estimates (0.2% vs. 0.7% expected). Later today, 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.