Expected USD/CAD Range: 1.030 – 1.035 Update: The Canadian Dollar is slightly weaker this morning and trading around 1.032. The weakness in the loonie is attributable to soft oil prices resulting from the easing of tensions in the Middle East. Personal Income and pending data out of the US this morning came in as expected and failed to move the markets. Overseas, the Pound Sterling is up across the board (and 0.5% against CAD) as Bank of England Governor Mark Carney has been quoted as saying he saw no case for further stimulus as the UK recovery has gained traction. The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have slowed notably and while some of the data from China is encouraging, it is becoming clear that sub 8% growth in China is here to stay. At the same time, the ongoing (admittedly halting) recovery in the US will sooner or later lead to a tapering of the Fed’s bond purchase programs. Closer to home, Canada’s new central banker is optimistic about our recovery but shows no inclination towards raising rates in the next several quarters. As a result of all of this and not surprisingly, the CAD has declined over 3% relative to the USD since the beginning of the year. We expect the CAD to be even lower relative to its US counterpart by the end of the year.
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