The Canadian dollar is mostly flat today, but strengthening against the Japanese yen and the Australian dollar. The Canadian dollar has been supported by recent GDP data that met consensus expectations. Thanks to a turnaround in commodities and a fiscal stimulus program unveiled by the Liberal government, growth last year was very strong. This year, traders have been less certain regarding the country's outlook as growth has been slowing since last summer and the outcome of NAFTA negotiations remain uncertain. The latest figures suggest that the good times continue. Upcoming manufacturing PMIs later today should also be supportive for the Canadian dollar, thanks to a global manufacturing boom. Looking at the latest NAFTA headlines, Canadian Foreign Minister Chrystia Freeland is optimistic for a deal thanks to recent progress. In an interview with Bloomberg, Freeland stated that a positive outcome from the negotiations was "absolutely possible". Our short-term and medium-term outlook on the currency remain bullish.
The USD/CAD exchange rate is currently above 1.2310. The euro is up slightly against the Canadian dollar, with EUR/CAD currently above 1.530. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.7530.
This is a fairly light week for economic data relating to the Canadian dollar. MoM November GDP growth (0.4%) met expectations. Industrial product prices (2.2%) and raw material prices (6.2%) were lower than previous figures. Later today, we’ll get the Markit manufacturing PMI. Last week, retail sales missed estimates while headline inflation met estimates.
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.