A string of disappointing news has turned market sentiment negative this morning. Overnight, UK headline inflation data showed that inflation rose at an annual pace of 10.1% over the past month, suggesting that the Bank of England has some work to do in raising interest rates. Then, the Bank of Atlanta Regional Fed President commented that he would like to see rates above 5%. This morning, in what is scheduled to be another busy day for earnings, Morgan Stanley’s stock fell after it posted a decline in net revenue and income. Bank earnings will be reviewed closely for any signs of further turmoil after last month’s collapse of a few US regional banks and the sale of Credit Suisse to UBS.
The negative market outlook combined with lower oil prices pushed the Canadian dollar down about half a penny overnight against the US dollar. The Canadian dollar has now slipped 1.5 cents from last Friday’s two-month high. We see this as a reprieve for US dollar sellers, and we expect the Canadian dollar to continue to gain against the US dollar over the short to medium term.
The Canadian dollar is currently trading at 1.3435 against the US dollar.