The Canadian dollar is slightly better on higher oil prices, possible NAFTA agreement on the horizon, which is giving a boost to the currency. Oil prices have now reached a three year high there by increasing expectations of a boost to the Canadian economy, however, oil companies in Canada may not spend on investments that they have in past, not really sure if prices will stay at these levels.
USDCAD 1.2796, 1.2788, 1.2774 1.2815, 1.2818, 1.2828
The Canadian Dollar remains stable at lower levels versus the US Dollar, with oil prices down on the day. There was no deal on NAFTA at the end of last week, though Canadian negotiators noted significant progress having been made. This week we have monthly GDP for February (a solid 0.3% gain is expected) while BoC Governor Steven Poloz is also speaking.
The US Dollar is near a 3-month high versus the Euro, and rose to a 3-month high versus the Pound, as investors continue to adjust their bets on the Greenback weakening. Against a basket of currencies, it is now at a key level that could determine whether it simply gives back the ground it has made over the past month, or whether it can head higher. This week we have the Federal Reserve’s interest rate meeting as well as the April employment report.
The Pound has begun the week generally lower as investors rapidly reverse bets that the Bank of England will raise interest rates next week. Michel Barnier said that the UK and the EU need to accelerate work on the Irish border ahead of June’s summit, as this remains the key outstanding issue on the future relationship. The focus this week will be on whether the purchasing manager’s indexes show a bounce back in activity for April after March saw a slump which was largely blamed on disruption from heavy snow.
Weaker-than-expected German data has weighed on the Euro with retail sales unexpectedly dropping in March and inflation slowed. This has added to expectations that the European Central Bank is further away from completely unwinding its stimulus, following last week’s meeting where Draghi said they are assessing the growth to slow down.
The Mexican Peso is down almost one percentage point versus the US Dollar today, despite the economy growing at a quicker pace in the first three months of the year, compared to the last three of 2017. The Mexican Peso remains very weak in historical terms as NAFTA is concerning, high inflation, and political nerves weigh on the currency.