The Canadian dollar is mostly weaker today. CAD is currently the weakest against the Japanese yen and the British pound. Yesterday, the currency surged alongside higher crude oil prices. The Canadian dollar was helped by easing US-China trade tensions following a speech by Chinese President Xi. Looking at USD/CAD, the pair traded below 1.260 yesterday, but is now trading above this level.
Looking at recent news and data, Texas Governor Greg Abbott predicted that the NAFTA talks will be successful. "It's looks like we will cross the goal line in a way to make NAFTA even better," he said. There are no other significant updates relating to NAFTA. Turning to economic data, while housing starts were ahead of estimates, the data had a limited impact on the currency. 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 1.2610. The euro is up slightly against the Canadian dollar, with EUR/CAD currently above 1.560. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.7880.
This is a light week for Canadian economic data. The Bank of Canada's business outlook survey suggested that most businesses were optimistic regarding future sales. Housing starts for March (225.0k vs. 218.0k expected) were above estimates, while building permits for February (-2.6% vs. 1.3%) were below estimates. Tomorrow, 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.