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 …