The Canadian dollar is mixed today. CAD is strengthening against the US dollar and the Japanese yen, while selling off against the British pound. Last week, the Canadian dollar traded in a narrow range. Following recent price-action, we have upgraded our short-term outlook on the currency to neutral.
Turning to the latest news, President Trump warned Mexico to stop flows of illegal drugs and migrants to the US and threatened to walk away from NAFTA. While previous headlines suggested that NAFTA negotiations were making good progress, Trump's latest tweets suggest that relations between NAFTA remains a bargaining chip for the US. Our short-term outlook on the Canadian dollar is neutral, while our medium-term outlook is bearish.
The USD/CAD exchange rate is currently above 1.2870. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5870. The pound is up slightly against the Canadian dollar, with GBP/CAD trading above 1.810.
This is a fairly light week for Canadian economic data. Later today, we’ll see Markit manufacturing PMIs for March. On Thursday, we’ll see the trade balance for February. On Friday, we’ll see housing starts, and changes in employment for March. Last week, Canadian GDP growth figures for January missed 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.