I'm looking for dollar/Canada to trade within the well-defined C$1.1370-C$1.15 range ahead of the tier-one economic releases that are out this Friday.
After the payroll data was released, it was more or less U.S. dollar buying across the board, but Canada's reaction was muted when compared with other currencies.
Given the Fed's middle-of-the-road statement that the end is somewhere nearer rather than further, it implies that the (U.S.-Canada) interest rate differential is going to narrow, and that is favorable for the Canadian dollar.
He repeated the call for modest interest rate increases.
I see a test, and a successful one at that, through the 14-year high.
Canada looks to be a buy not only against the U.S. dollar but the euro as well.
A hawkish tone is already priced into the markets, both in the yield curve and on the currency. It was the big event risk of the week and he did live up to market expectations.
The upcoming election on Jan. 23 isn't likely to have a negative impact on the Canadian dollar. Nor should it.
I do see the Bank of Canada looking to raise rates, and the converging yield curve between Canada and the United States will continue to underpin the Canadian dollar.
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