Expected USD/CAD Range: 1.093 – 1.098

Update: While it is never easy to completely separate the impact, so far this year, the weakness in the Canadian Dollar has been mostly due to domestic factors that have driven the loonie lower. Today we are seeing a clear example of US Dollar strength driving the same trend. The US Dollar is up against almost all major currencies (the Pound Sterling being the one notable exception) and held those levels even after some disappointing statistics on housing starts. The market remains focused on Wednesday’s Bank of Canada release as the next major catalyst for the loonie.

The Big Picture: The Bank of Canada remains cautiously optimistic on the Canadian economy but dropped its tightening bias in October. Indeed, at the moment, the primary concern of Governor Poloz seems to be inflation rates that are well below the Bank’s 2% target and the …

Expected USD/CAD Range: 1.090 – 1.096

Update: The Canadian Dollar is mildly stronger this morning and taking a break from the seemingly relentless 2014 declines. The number of jobless claims in the US and inflation figures came in at expected levels but the US Dollar is down across the board. The focus is now quickly turning from economic statistics which give us a sense of the relative strength of the US and Canadian economy to the Bank of Canada release next week which may provide further indication as to whether Governor Poloz intends to continue to simply talk the Canadian Dollar lower or whether he intends to take any affirmative steps in that direction (i.e.: cut rates).

The Big Picture: The Bank of Canada remains cautiously optimistic on the Canadian economy but dropped its tightening bias in October. Indeed, at the moment, the primary concern of Governor Poloz seems to be inflation rates that are well below the Bank’s 2% target and the …

Expected USD/CAD Range: 1.092 – 1.097

Update: This could be the first sentence of our update almost every day so far in 2014: The loonie reached new lows yesterday, a move that is unlikely to reverse any time soon. The US Dollar reached 1.099 overnight and is currently at 1.095 against the loonie. Much of the weakness in the last day has been due to overall US Dollar strength. However, while it is true the US Dollar has been gaining strength since the beginning of the year, the loonie has also been the weakest performer among the majors (see table below). Among other factors driving the negative sentiment on the loonie are (a) a dovish Bank of Canada perceived to be pushing for a lower Canadian Dollar, (b) an unhealthy jobs picture, and (c) a worrying export picture.

The Big Picture: The Bank of Canada remains cautiously optimistic on the Canadian economy but dropped its tightening bias in October. Indeed, at the moment, the primary concern of …

Expected USD/CAD Range: 1.087 – 1.095

Update: After showing some modest strength yesterday (mostly due ot overall USD weakness), the Canadian Dollar is again near four year lows and currently trading at 1.092. The loonie also benefited yesterday from the Bank of Canada’s business outlook survey which said there are some positive signs for the economy as perceived by businesses surveyed and likely a result of US economic strength. This morning, retail sales in the US came in at higher than expected, which gave the greenback yet another boost and gave ammunition to those who will argue that last week’s data pointing to a weak US labor market was a blip on the radar.

The Big Picture: The Bank of Canada remains cautiously optimistic on the Canadian economy but dropped its tightening bias in October. Indeed, at the moment, the primary concern of Governor Poloz seems to be inflation rates that are well below the Bank’s 2% target and the …