Expected USD/CAD Range: 1.064 – 1.068

Update:  The Canadian Dollar is down 20 pips and trading around 1.066.  The loonie seems to have found a level and is range bound for now.  It is a light day on the economic calendar both here and south of the border but at 8:15 this morning housings starts in Canada will give us another indication as to how constrained Governor Poloz may be in his fight against disinflation.  If the housing market continues to dominate the Canadian economic story then the Bank of Canada’s suggestion that it may lower rates and drive the loonie lower to stimulate export growth will become increasingly not credible.  On the other hand, if housing starts are starting to cool (at least relative to expectations) then expect further Canadian Dollar weakness.

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:  Canadian Dollar sellers seem exhausted for now.  The loonie is down roughly 2% in the last two weeks but seems to have settled down at its current level of 1.0652.  Even the Bank of Canada’s more dovish statement on Wednesday did not move the loonie lower.  We are now waiting for employment figures in the US and Canada at 8:30 as the last economic event of the week.  While we remain bearish on the loonie in the long term (see below), we continue to think that the Canadian Dollar has reached its lows for the rest of the year.

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 …

Expected USD/CAD Range: 1.065 – 1.070

Update: According to this morning’s data, the US is humming along just fine with manufacturing leading and consumers dragging. GDP grew at 3.6% in Q3 (above consensus of 3.1%) and jobless figures came in slightly below expectations. In Canada, the building permits figure came in at well above expectations and probably heightens the tension between the Bank of Canada’s desire to stimulate export growth without fueling asset bubbles. The Canadian Dollar is flat to yesterday’s close at 1.068.

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 – 1.068

Update: The day has already been eventful and we are only getting started. One measure of private sector hiring in the US suggested a stronger than expected US employment picture and reignited the debate on the timing of tapering. Canadian International Merchandise Trade for October was well ahead of expectations. The net result was the Canadian Dollar trading slightly weaker at 1.066. All eyes are now on the Bank of Canada and its rate decision later this morning. No rate cuts are expected but there is a minority view that the bank may lean dovish versus the status quo of a neutral stance on cuts.

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 …