USD/CAD - US dollar to Canadian dollar

USD/CAD, or US dollar to Canadian dollar, is a major currency pair and is heavily traded in foreign exchange markets. Given that crude oil and refined petroleum products make up a significant portion of Canadian exports, USD/CAD tends to track global commodity prices. Similar to other commodity currency pairs, USD/CAD tends to depreciate during economic booms (CAD appreciates) while strengthening (CAD depreciates) during downturns. Looking at recent history, USD/CAD appreciated significantly during the 2008 financial crisis and following an emerging markets downturn in 2016. 

Outlook
Bullish

US dollar daily update

The US dollar is mostly lower today. The dollar is currently the weakest against the British pound and the Australian dollar. Yesterday, the buck reversed course following weaker-than-expected Philadelphia Fed manufacturing survey data. Today's trading range for the US dollar index is 94.40 - 95.50. 

Looking at the dollar yesterday, second-tier economic figures such as the Philly Fed manufacturing survey seldom have a significant influence on the currency. Instead, traders were looking for a reason to sell the dollar after the buck moved into overbought territory, as indicated by the top end of yesterday's trading range (95.30). After falling for two trading sessions in a row, the dollar is no longer looking overbought. 

Turning to other developments, Federal Reserve member Kashkari (who is not a voter this year) stated that there are no signs of overheating in the economy. This is especially the case as the Fed has been surprised by relatively weak wage growth and inflation in recent quarters. Kashkari is a well-known dove, and tends to advocate for easier monetary policies. 

While the dollar has sold off in recent days, the currency has plenty of catalysts to keep strengthening. Yesterday's initial jobless claims figures showed that US unemployment is currently at historical lows. Upcoming sentiment figures later today should provide cues for the US economic outlook. The US continues to outperform all its major peers, which is helping the currency. Our outlook on the US dollar remains bullish. 

USD/JPY is up slightly and currently trading above 109.90. EUR/USD is up and trading above 1.1660. GBP/USD is up, and currently above 1.3290. 

Date Event Actual Previous
June 19 Housing Starts MAY 1.350m 1.286m
June 19 Building Permits MAY 1.301m 1.364m
June 20 Current Account Q1 -$124.1b -$116.2b
June 20 Existing Home Sales MAY 5.43m 5.45m
June 20 Fed Chair Powell Speech
June 21 House Price Index MoM APR 0.1% 0.2%
June 21 Initial Jobless Claims 16/JUN 218k 221k
June 22 Markit Services PMI Flash JUN 56.8
June 22 Markit Manufacturing PMI Flash JUN 56.4
June 22 Markit Composite PMI Flash JUN 56.6
Updated 

Canadian dollar daily update

The Canadian dollar is mixed today. The loonie is currently selling off against the US dollar, while strengthening against the euro and the British pound. Yesterday, the Canadian dollar continued to weaken against the US dollar, and is currently trading near 12-month lows. Today's USD/CAD trading range is 1.3070 - 1.3330. 

As the outlook for Canada darkens, the odds of a Bank of Canada rate hike are falling. This can be seen in falling bond yields for short-term Canadian government bonds. While 2-year US Treasury bond yields continue to rise (and are currently yielding 2.56%), equivalent bond yields in Canada are falling and are currently yielding just 1.85%. Beyond the differential in bond yields (0.71%), yields are also moving in the opposite direction. This is a particularly bearish sign, and suggests that the Canadian dollar is likely to keep weakening. 

Beyond bearish signals from the bond market, the Canadian dollar remains under pressure thanks to decelerating growth, ongoing trade tensions and weakness in crude oil prices. More recently, the Canadian real estate market is also showing signs of jitters, with sales volumes falling to a nine year low according to recent figures from the Canadian Real Estate Association. With plenty of reasons for the currency to keep weakening, our outlook on the loonie remains bearish. Note that there are no major updates relating to NAFTA today.

The USD/CAD exchange rate is currently above 1.3320. The euro is down against the Canadian dollar, with EUR/CAD currently above 1.5350. The pound is down slightly against the Canadian dollar, with GBP/CAD trading above 1.7460. CAD/JPY is flat, and currently trading above 82.80. 

Date Event Actual Previous
June 21 ADP Employment Change MAY 30.2K
June 21 Wholesale Sales MoM APR 1.1%
June 22 Inflation Rate YoY MAY 2.2%
June 22 Core Inflation Rate YoY MAY 1.5%
June 22 Retail Sales YoY APR 4.1%
Updated 

US dollar to Canadian dollar Outlook

Outlook
Bullish

Updated 

US dollar analysis

As US dollar rises, time to get bearish

In our previous commentary on the US dollar, we warned that a weak dollar was hiding significant risks in growth-sensitive assets such as equities and European currencies. As the world’s reserve currency, the buck is inversely correlated to most financial assets because most cross-border lending is conducted in dollars. Thanks to a slowdown in economic growth outside the United States coupled wit…

Published 
Tags: US dollar

US dollar weakness masks growing risks

In our previous take on the US dollar in early February, we wrote that the currency was set to remain weak. At the time, ex-US growth was accelerating, while speculator sentiment was only mildly bearish. While dollar bulls have argued that rate hikes should help the currency, we wrote that expectations for monetary tightening were rising around the world, limiting the impact from the Fed’s action…

Published 
Tags: US dollar

US dollar bear market: three reasons it can continue

The US dollar currency index, a measure of USD against six major peers, declined by 9.9% in 2017. Last month, the currency index continued declining and fell by another 3.3%. Given the speed of the recent decline, the US dollar started looking oversold according to technical indicators around mid-January. While we warned that the currency was looking oversold in several recent editions of our US …

Published 
Tags: US dollar

Canadian dollar analysis

Canadian dollar outlook: neutral as currency gets a big break

While the outlook for the Canadian dollar looked dire just a few months ago, the currency appears to have recently turned a corner. After looking oversold in late March, the currency managed to strengthen thanks to a rebound in crude oil prices. Two weeks later, the Canadian dollar received more good news as the Trump administration pushed to conclude NAFTA talks at a faster pace. In more recent …

Published 

Canadian dollar bulls cut their losses: COT Report

Looking at last week’s Commitment of Traders report, the only notable changes were relating to net positions in the Swiss franc, Canadian dollar and British pound. Changes in positioning were fairly limited for the US dollar, euro, gold and crude oil. Crude oil positions, based on 3-year trailing averages and net speculator positions as a proportion of total open interest, remains at a bullish ex…

Published 

Canadian dollar in vogue: COT report

When will the Canadian dollar rebound? We take a closer look at the Canadian dollar and what the latest Commitments of Traders report says about the currency. Bank of Canada remains cautious - impacting trader optimism, but better data has us rethinking an earlier prediction.

Published 

Economic calendar

Economic Calendar by TradingView