The Canadian dollar is mostly higher today. CAD is currently the strongest against the Australian dollar, the British pound, and the euro. While the loonie tends to weaken alongside other "risk-on" currencies, the currency has been supported by recent strength in crude oil prices. The commodity has performed remarkably well in the past few weeks, thanks to rising geopolitical tensions and Saudi Arabia's call for a 10-20 year OPEC/Russia deal. The Canadian dollar may also be doing better as a result of Canada's positive trading relationship with the United States. While the currency was weighed down by NAFTA-related fears earlier this year, Trump's focus appears to be shifting to China and Germany.
Turning to NAFTA news, Trump trade advisor Peter Navarro told CNBC that the US may get a "really good deal" on NAFTA. Recent comments from Canadian, US and Mexican officials suggest more optimism for a positive outcome to the talks. Our short-term and medium-term outlook remains bearish.
The USD/CAD exchange rate is currently above 1.2840. The euro is down against the Canadian dollar, with EUR/CAD currently above 1.5940. The pound is down against the Canadian dollar, with GBP/CAD trading above 1.8180.
This is a relatively light week for Canadian economic data. We'll see GDP figures for January on Thursday. Last week, year-over-year inflation was higher than expectations.
As the Canadian dollar weakens, we are downgrading the currency to bearish 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.