Expected USD/CAD Range: 1.056 – 1.063

Update: All eyes are on the Fed’s announcement tomorrow; will it begin cutting back extraordinary monetary stimulus (“taper”) this year or wait for the following months. There has been quite a dramatic shift in consensus with a slight majority now believing that a taper announcement of some sort is forthcoming tomorrow. The shift has been due to changing perception of the strength of the US economy as data in recent weeks has surprised to the upside. The US Dollar is slightly stronger across the board, including against the loonie which is now trading at 1.060. We expect little change until tomorrow’s announcement.

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: 1.056 – 1.063

Update: The Canadian Dollar is hovering around 1.059 and generally flat with little economic data on the tape this morning in Canada. US industrial production was well ahead expectations and strengthened the argument for at least the beginning of taper later this week by the Fed. The sentiment continues to be overwhelmingly negative on the loonie both in the retail press as well as in the investment community. This uniformity in view continues to argue for a short term recovery (even more than what we saw last week).

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: 1.061 – 1.066

Update: This morning, US PPI figures once again confirmed that inflation is not a threat in the United States. In Canada, Governor Poloz yesterday also reaffirmed that in his view the Central Bank’s main challenge at the moment is balancing the threat of disinflation versus containing asset bubbles (in particular in real estate). He steadfastly refused to comment on the value of the Canadian Dollar. All in all, his speech and press conference were more balanced than dovish and the Canadian Dollar reacted by strengthening 20 pips. We are currently trading at 1.064 with little volatility expected between now and the end of the day.

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: 1.062 – 1.067

Update: Another eventful day for the Canadian Dollar which is weaker by about the penny since the open of North American Trade this morning. The biggest driver of the move has been a broad-based rally of the US Dollar resulting from stronger than expected retail sales in November. While weekly initial jobless claims were higher than expected, they were quickly dismissed as a statistical anomaly. Along with the series of strong data that we have been receiving from the US over the last couple of weeks, murmurs are now starting to get louder as to the possibility of tapering beginning at the Fed’s final meeting next week. Closer to home, we are awaiting comments from Governor Poloz in the afternoon followed by a press release. Given the recent turn to “dovish street”, the markets are watching closely for any signs as to whether the Bank of Canada is really thinking of a rate cut to tame disinflation.

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 …