Updates (2013-2014)

Expected USD/CAD Range: 1.055 – 1.060

Update: Canada’s economy grew at an annualized rate of 2.7% in the third quarter, the fastest quarterly growth rate in two years, and well ahead of a consensus estimate of 2.5%. There was a slight downward revision to the second quarter growth rate but the net result of the release is a brighter picture of the Canadian economy than most expected. Strong growth was recorded in household expenditures while exports continued to decline. With US markets in holiday mode, this is likely to be the dominant story for the Canadian Dollar for the rest of the day. The Canadian Dollar reacted immediately by gaining 15 pips and we expect it to continue to strengthen for the rest of the day.

The Big Picture: Canada’s new central banker is cautiously optimistic about the economy but shows no inclination towards …

Expected USD/CAD Range: 1.057 – 1.062

Update: The Canadian Dollar is now comfortably trading at the lowest level since June of 2010. The immediate reasons are the lower price of oil since the nuclear agreement announced this weekend and the upward revision of Q2 current account deficit announced this morning. There is also renewed attention being paid to the Goldman Sachs report out earlier which identified shorting the loonie as one the firm’s top investment ideas for 2014. The move fits with our long held view of the Canadian Dollar weakening over the longer term. However, we continue to see the recent leg up as too far too soon and would suggest that US Dollar sellers take advantage of the situation.

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: It’s all about… oil! For the third day in a row, oil prices are driving the Canadian Dollar. The dip in oil prices this morning has moved the Canadian Dollar to 1.057 and we are now hovering right around the lowest levels since the middle of 2010. The rash of US economic data out this morning failed to make much of an impact, though US initial jobless claims came in at better than expected levels. We believe that for technical reasons, in the in the near term (two week time horizeon), we are not going to sustain these levels and that US Dollar sellers should take advantage of this opportunity. Our longer remains the same and is outlined 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: 1.053 – 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 …