The Canadian dollar is lower against all major currencies today. The loonie is currently the weakest against the US dollar. While the Canadian dollar tends to strengthen around Bank of Canada interest rate decisions (as the BoC is currently hiking rates), this isn't the case today.
Turning to most recent NAFTA news, the three sides are set to meet in Washington this Thursday. According to Reuters, a source has claimed that there won't be an announcement (regarding a deal) at the upcoming meeting. While some areas are close to a resolution (including chapters relating to telecoms, energy and technical barriers to trade), the most contentious areas remain unresolved.
Looking at the Bank of Canada's rate hike decision, most analysts are forecasting that the Bank will remain on hold. Last year, Governor Poloz was heavily criticized for failing to provide sufficient guidance ahead of the Bank's rate hike in July 2017. As a result, most speculators expect the Bank to provide guidance during today's press release, but do not expect a rate hike. Others argue that the BoC is likely to raise rates following the BoC's business outlook survey (which was fairly optimistic) and Trump's focus on currency devaluation by trading partners. Our short-term outlook on the Canadian dollar is bullish, while our medium-term outlook remains neutral.
The USD/CAD exchange rate is currently above 1.2580. The euro is up against the Canadian dollar, with EUR/CAD currently above 1.5560. The pound is up slightly against the Canadian dollar, with GBP/CAD trading above 1.7950.
This is a significant week for economic data and events relating to the Canadian dollar, thanks to an upcoming rate hike decision. Today is the most important day, and we’ll see the Bank of Canada’s decision on interest rates, as well as the Bank’s Monetary Policy Report. We’ll also hear Governor Poloz speak at a press conference. On Thursday, we’ll see ADP employment changes for March. On Friday, we’ll see both YoY retail sales for February as well as the YoY consumer price index for March. Last week, the BoC business outlook survey suggested that Canadian businesses are optimistic regarding future revenues.
As the Canadian dollar trades sideways, we are now neutral on the currency 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.