USD to CAD is flattish and this is likely to be one of the quietest trading days of the year for the Canadian dollar as the US (our largest trading partner) and the UK (the capital of FX trading) are on banking holidays. The Loonie continues slightly lower than the multi-year highs that it hit a couple of weeks ago. There were some interesting economic data points in Canada released this morning. Canada’s current account balance posted a $1.2 billion surplus in the first quarter, the first such surplus since the third quarter of 2008. The surplus in the first quarter mostly reflected the surge in the prices of Canada’s commodity exports, including oil and lumber. A related data point showed that raw material prices have risen a whopping 55% over April of last year. The number was expected and not entirely surprising given that last April was close to the beginning of the pandemic but the fluctuations in prices is still pretty incredible. Also, these data points show why the Bank of Canada has not been particularly concerned about the rising value of the Canadian dollar as they partially reflect the fundamentals of rising commodity prices and are not making our exports less competitive on a macro basis. The week will be full of important economic indicators with the potential to move the exchange rate, starting with Q1 GDP numbers in Canada expected to be released tomorrow.
