Interchange Financial

Expected USD/CAD Range: 1.053 – 1.059

Update: The Canadian Dollar is trading at 1.055 and continues to hover near four month lows. The major theme continues to be oil prices and the potential impact of the agreement over nuclear issues between Iran and the world powers. We believe that while the Canadian Dollar will trade lower over the long term (see below), in the near term we will see a higher Canadian Dollar and that short term US Dollar sellers should take advantage of the opportunity and sell now.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.053 – 1.059

Update: The Canadian Dollar is back at near three month lows as the oil trades down after an agreement was reached between Iran and world powers to halt the advancement of Iran’s nuclear activity in exchange for limited sanctions relief. The loonie is down nearly half a penny and trading at around 1.056 to the US Dollar. The US Dollar is stronger across the board as oil importing currencies globally benefit from the decline in oil prices. While the agreement with Iran does not bring any new oil to the market in the next several months, it is widely viewed as reducing geopolitical risk and the risk premium in oil prices. We believe that while in the long run this deal may change the dynamics of the geopolitical situation in the Middle East, the backlash against this deal may manifest itself in ways that dampen the impact on oil prices. As such, we think the US Dollar sellers should take advantage of the opportunity.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.053 – 1.057

Update: The Canadian Dollar is at its lowest level since early September. The sell-off reflects a variety of factors, including the market’s ongoing response to dovish comments by Poloz as well as weaker commodity prices. For the first time in a while there was quite a bit of attention being paid to this morning’s CPI figures in Canada. They came in generally in line with expectations and confirmed that inflation is below the Bank of Canada’s target range. Retail sales for September were quite a bit stronger than expected in Canada. The releases did not impact the market and he loonie continues to hover around 1.055.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters.  In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.047 – 1.052

Update: It has been all about US economic data the last couple of mornings. Retail sales came in stronger than expected and CPI came in at expected levels yesterday morning. This morning, initial jobless claims came in slightly below expectations PPI was just above expectations. All in all, a mixed picture of the economy providing no particular clue about how quickly the Fed will begin tapering its extraordinary monetary stimulus. Closer to home, Governor Poloz gave testimony before the Senate which was interpreted as dovish, leading to weakness in the Canadian Dollar which is currently trading at 1.049.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.042 – 1.047

Update: Another generally directionless morning looms for the Canadian Dollar. On the one hand, the dovish comments by outgoing Fed Chairman Berananke led to US Dollar weakness overnight. On the other hand, strong retail sales figures from our southern neighbors suggest the US economy is stronger than the recent comments by Fed officials imply. At the moment, we are trading around 1.045 and there is little reason to think we will see a break out in either direction unless we see a surprise in the Fed release scheduled for 2 PM today.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.039 – 1.046

Update: With little economic data to guide the market, the focus in Canada is again on real estate. In particular, a report from the OECD and a report from a mortgage broker’s association are once again raising alarm about the real estate market in Canada. Earlier this morning, the Canadian Dollar was lower on the back of weak oil prices but both of those trends have now reversed and the loonie is now back at 1.043 with little resolve in either direction. The ongoing short term themes are US Dollar weakness with no end to monetary stimulus in sight, reverberations from the announcement of Chinese economic reform and the Bank of Canada’s ongoing battle to prop up exports by lowering the Canadian Dollar.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.039 – 1.046

Update: The Canadian Dollar is trading around 1.042, its strongest level in about a week. Much of the strength is due to news out of China suggesting that the government is leaning towards expanding economic freedoms. That has led to firming of commodity prices as well as other risk assets, which has in turn strengthened commodity currencies such as the loonie and the Australian Dollar. In addition, the Janet Yellen’s comments on the continued need for monetary stimulus continue to reverberate and push the US Dollar lower across the board.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters.  In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.044 – 1.050

Update: The US Dollar is broadly lower this morning on the back of future Fed Chairwoman Janet Yellen’s commentary at confirmation hearings yesterday which has been interpreted as broadly supportive of continuing monetary stimulus. The greenback is hovering around 1.046 against the Canadian Dollar. Part of the Loonie strength is also flow related as there has been a significant amount of CAD selling over the last couple of weeks and sellers may simply be taking a breather. We continue to think that the USD will trend higher over the short term and the longer term (see below).

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.046 – 1.052

Update: The Canadian Dollar is now trading right at the 1.050 mark. The move is a reflection of the overall strength of the US Dollar this morning and comes after a volatile twelve hours. Yesterday afternoon, Janet Yellen, the future chairman of the Fed argued that much further US economic progress is needed before stimulus is reduced. That led to a significant drop in the US Dollar. But by this morning the greenback had regained all of that ground and then some, especially against commodity currencies like the loonie.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …

Expected USD/CAD Range: 1.046 – 1.052

Update: The Canadian Dollar is slightly stronger this morning trading at 1.048. There is little economic news on the North American agenda today. Much of the action is in Europe where the Pound Sterling is significantly stronger after the BoE indicated some surprising bullishness on the economy and employment in particular. Closer to home, Bloomberg points out that the Canadian Dollar is the most downgraded currency in the last month with analyst forecasts averaging 1.06 for the end of 2014.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards raising rates in the next several quarters. In fact, the low dollar policy being pursued by the bank suggests …