Expected USD/CAD Range: 1.040 – 1.048

Update: The Canadian Dollar is weaker overnight and trading near two months low at 1.044. The market is intently focused on economic data points due out later this week. Either they will reinforce the developing sense that the Canadian economy is stronger than expected as indicated by the GDP figure last month or they will show that the GDP mark was a blip and that our Central Bank is seeing things right in anticipating slower growth. If the economic figures (building permits and employment) are strong, the market will reconsider the negative bias towards the Canadian Dollar. Otherwise, expect the loonie to continue to decline.

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: 1.038 – 1.046

Update: The Canadian Dollar is showing some strength and trading the around the 1.040 level. Some of the strength is attributable to the strength is the Australian Dollar being interpreted as showing improved prospects for commodity-based currencies. The failure of Blackberry to sell the company is dominating the business headlines in Canada but is largely impactful on the exchange rate. US Factory Orders for September are out at 10 AM and will be the main economic data point 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: 1.038 – 1.046

Update: The Canadian economy grew 0.3% in August, well ahead of a consensus estimate for 0.1%. While we believe that in the longer term the Canadian Dollar will depreciate (see “The Big Picture” below), given the accumulating evidence of the relative strength of the Canadian economy, the slide of the loonie might be reversed in the near future in response to this latest data point. Indeed, the Canadian Dollar is up 50 pips since yesterday’s close and at 1.043. In the short term, we expect the Canadian currency to continue to firm up against its US counterpart.

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 …