Updates (2013-2014)

Expected USD/CAD Range: 1.035– 1.040

Update: The strains resulting from the US shutdown are now starting to show on the Canadian Dollar which is down for the third day in a row and trading at 1.038. The loonie is now trading at a one month low relative to the US Dollar. The federal government’s rejection of the proposed transaction to sell Allstream to a foreign buyer on national security grounds is contributing to a growing sense that purchases of Canadian companies by foreigners are increasingly difficult and also mildly negative for the Canadian Dollar. The nomination of Janet Yellen, perceived as an “easy money advocate”, to replace Ben Bernake as Fed Chairman was largely expected and priced into markets. The release of minutes from the September meeting is scheduled at 2 today and should provide insight into the surprise decision not to taper last month.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.029 – 1.035

Update: With no major economic data expected out of the US or Canada today, the markets remain focused on the political scene in Washington. It has now become clear that what started as a budget showdown is evolving into a broader standoff involving the more serious issue of the debt ceiling. The markets are generally taking all of this in stride with a mild repricing of risk in all asset classes. The Canadian Dollar is currently trading at 1.032 and exhibiting no desire to break out of its recent range. We think the dynamics in Washington will get worse before they get better and therefore expect the loonie to be weaker in the short term.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.030 – 1.036

Update: With the US government shutdown going into its second week and the budget/Obamacare debate merging into the debt ceiling issue, the markets are starting to take the potential for a government-induced economic shock more seriously. Across all markets this has meant a higher premium for risk, which in the currency exchange markets translates into a lower value for the Canadian Dollar. The loonie is down 0.3% and trading around 1.033. Much of the economic data which typically guides daily trading in the market is not being released due to the shutdown which is adding to the sense of uncertainty around the state of the economy in the US. In Canada, the value of building permits issued by municipalities has slowed more than expected. All in all, we think the Canadian Dollar is headed lower in the short term until we get hints of a potential resolution to the shutdown.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.030 – 1.036

Update: The Canadian Dollar is slightly weaker this morning and trading around 1.033. For this first week of the shutdown of the US Government, the loonie is one of only two major currencies that is down against the US Dollar (the other is the Pound Sterling reacting to tempered expectations about the strength of the UK economy). Aside from worries about the impact on the Canadian economy, another factor contributing to CAD weakness is the widening spread between Western Canadian Select and WTI oil prices which is now at its highest levels since January.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.028 – 1.034

Update: The Canadian Dollar is stronger this morning against a broadly lower USD. The loonie is trading at 1.031. The weakness in the greenback is mostly attributable to mixed economic data out of the United States this morning, especially a lower than expected reading of the ISM Non-manufacturing index.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.031 – 1.037

Update: The Canadian Dollar is weaker this morning by 0.2% and trading around 1.034. The loonie had not seen that level since mid October. There are a variety of factors driving the Canadian currency lower. First, the speech by Bank of Canada Senior Deputy Governor Tiff Macklem was decidedly dovish and seemed to be moving down GDP targets for the year. Also, the topic of the speech was exports and specifically the decline in competitiveness for Canadian exporters. Mr. Macklem blamed most of the decline in the competitiveness in Canadian exports on the rising value of the Canadian Dollar. While he was discussing longer term trends, this kind of thinking does give some credence that within the Bank of Canada there is some support for a low-Dollar policy to support exporters. The second factor driving the loonie and all other risk assets lower is the shutdown of the US government, and in particular, the growing fear that unless a solution is found soon, this debate will get tied into the much more serious debt ceiling issue coming up later in October. Finally, the weaker overall commodity complex is also putting pressure on the Canadian Dollar.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.028 – 1.033

Update: The Canadian Dollar is stronger this morning after July GDP figures came in at better than expected (0.6% vs consensus of 0.5%). This latest data point reinforces the recently developing view that the Canadian economy is doing better than the market expected just a few months ago. The loonie is trading up by 0.3% at around 1.028. In the meantime, south of the border, Congress is slowly but surely moving towards a government shutdown as part of the Republican battle to delay and eventually defund Obamacare. We do not expect the shutdown to last more than a few days and consequently do not expect it to be all that impactful on the currency market.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

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 …

Expected USD/CAD Range: 1.028 – 1.033

Update: The Canadian Dollar continues to meander around 1.030. This morning’s data reinforced the status quo picture of the US economy experiencing a mild (and mixed) recovery with initial jobless claims coming in at slightly better than expected and GDP and consumption figures just below consensus. The fiscal impasse between Congress and the President has caused a minor bias against the US Dollar but is largely (and in our opinion, rightly) being ignored by the markets. In the absence of unexpected headlines, we expect this kind of directionless trading in USDCAD rates until we hear more from the Fed about its future plans for QE3.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …