The Canadian dollar is mostly lower today. CAD is currently the weakest against the British pound, the euro and the US dollar. Last week, the Canadian dollar strengthened throughout the week, but weakened on Friday. While the currency is being supported by increasing hopes for a NAFTA deal, ongoing trade tensions between the US and China are weighing on the currency.
We covered Trump's latest comments on trade in our US dollar daily update and China's potential response in the Australian dollar daily update. Turning to NAFTA news, an "in principle" agreement regarding the trade pact is unlikely at the upcoming Lima summit. According to a Reuters report, talks have not progressed far enough to make an announcement at the April 13-14 summit. While the US has backed down from demands for minimum North American auto content rules, the US is now pushing for more work to be done in "high salary" areas. The demand is likely to move automotive jobs from Mexico to the US and Canada. 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 1.2790. The euro is up slightly against the Canadian dollar, with EUR/CAD currently above 1.570. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.8050.
This is a light week for Canadian economic data. Later today, we'll see the Bank of Canada's business outlook survey. On Tuesday, we'll see housing starts for March and building permits for February. On Thursday, we'll see the new housing price index for February. Last week, changes in employment were ahead of 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.