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 …

Expected USD/CAD Range: 1.060 – 1.065

Update:  The US Dollar is again lower against most majors and flat against the Canadian Dollar at 1.06. The loonie rebounded yesterday throughout the day and is now at its strongest levels since late November. We had been arguing for a short term rebound and now expect the currency to stabilize at these levels for the rest of the year. There is quite a bit of focus on Western Canadian Select prices this morning as that major Canadian export trades at the lowest discount in roughly two months to crude prices. South of the border, Congressional negotiators seem to have agreed on a process for avoiding another budget showdown, though Congress has yet to approve the plan.

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: 1.060 – 1.065

Update:  The US Dollar is broadly lower against most majors this morning.  With little economic data on the North American calendar to give the market direction, we are mostly at the mercy of technicals and as we have argued for several days, USDCAD has moved up too far too fast and is in line for mild correction.  We may be seeing the beginning of that correction this morning with the loonie gaining some strength and trading around 1.062.

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 …