USDCAD daily chart
I have a close eye on USD/CAD today as the pair steadily slides as part of the broader US dollar selloff.
The loonie is so far underperforming the AUD and NZD today in percentage terms but it’s also brushing up against an important level. Moreover, the market may be hesitant to push though with US and UK holidays coming on Monday.
The key item on the agenda for the loonie in the week ahead is Thursday’s Canadian GDP report. RBC expects it will show the Canadian economy grew by 1.8% annualized
in Q1. The caveat is that the quarter was front-loaded with strength in January that gradually faded.
“We expect to see an increase in household consumption
in Q1 that was partially offset by a contraction in residential investment as
home resales cooled. Business investment likely inched higher, but is expected
to soften in the coming quarters as businesses freeze spending plans amid
disruptive trade policies,” RBC writes.
My major worry about Canada relates to housing, which continues to crack. Listings are mounting quickly in the Toronto area and with 5-year rates rising, there is little hope for relief any time soon. The Bank of Canada is now less-likely to cut rates in June and the rising loonie will help to cool inflation.
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