Expected USD/CAD Range: 1.039 – 1.046

Update: With little economic data to guide the market, the focus in Canada is again on real estate. In particular, a report from the OECD and a report from a mortgage broker’s association are once again raising alarm about the real estate market in Canada. Earlier this morning, the Canadian Dollar was lower on the back of weak oil prices but both of those trends have now reversed and the loonie is now back at 1.043 with little resolve in either direction. The ongoing short term themes are US Dollar weakness with no end to monetary stimulus in sight, reverberations from the announcement of Chinese economic reform and the Bank of Canada’s ongoing battle to prop up exports by lowering the Canadian Dollar.

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: 1.039 – 1.046

Update: The Canadian Dollar is trading around 1.042, its strongest level in about a week. Much of the strength is due to news out of China suggesting that the government is leaning towards expanding economic freedoms. That has led to firming of commodity prices as well as other risk assets, which has in turn strengthened commodity currencies such as the loonie and the Australian Dollar. In addition, the Janet Yellen’s comments on the continued need for monetary stimulus continue to reverberate and push the US Dollar lower across the board.

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: 1.044 – 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 …

Expected USD/CAD Range: 1.046 – 1.052

Update: The Canadian Dollar is now trading right at the 1.050 mark. The move is a reflection of the overall strength of the US Dollar this morning and comes after a volatile twelve hours. Yesterday afternoon, Janet Yellen, the future chairman of the Fed argued that much further US economic progress is needed before stimulus is reduced. That led to a significant drop in the US Dollar. But by this morning the greenback had regained all of that ground and then some, especially against commodity currencies like the loonie.

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 …