The Canadian dollar is fairly mixed today. While the currency is selling off against safe haven currencies such as the US dollar and the Japanese yen, the loonie is flat against the euro and the British pound. Yesterday, the Canadian dollar strengthened thanks to the strong performance of the S&P 500. Following a few days of sharp sell-offs, the stock market rout appeared to come to an end. Today, Asian stock markets were fairly weak, suggesting that the rout may not have ended. As the Canadian dollar is highly sensitive to risk appetite, the currency is weakening as a result. Looking at the latest economic data, trade balances were worse than expected while the Ivey PMI was also below expectations. Neither release had a significant impact on the currency. Turning to NAFTA, Prime Minister Justin Trudeau has embarked on a US trip in order to drum up support for the agreement. Following the recent sell-off in the currency, we will downgrade our short-term outlook on the Canadian dollar to neutral later today. Our medium-term outlook remains bullish.
The USD/CAD exchange rate is currently above 1.2520. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5450. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.7410.
Looking at economic data from Canada, markets will be focused on jobs numbers at the end of the week. Trade balances (-$3.2b vs. -$2.2b expected) and Ivey PMIs (55.2 vs. 61 expected) both missed expectations. Building permits (4.8% vs. 2% expected) were ahead of consensus expectations. Tomorrow, we'll get new housing prices and housing starts. Friday is the most important day, and we'll see changes in employment as well as the unemployment rate. Last week, November GDP growth met consensus expectations.
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.