Canadian dollar is weak, but CAD is able to outperform the GBP and JPY as headline risk continues to bite

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Published on Monday, 18 June 2012 13:04

Written by Rob Samson

"In this environment both oil prices and equity futures are relatively unchanged. We expect today’s range in USD-CAD to fall between 1.0196 and 1.0268" - Eric Théorêt at Scotiabank.

Global FX: The Canadian dollar (Currency:CAD) is weak on a day dominated by headline risks.

CAD is down 0.3% from Friday’s close against the US dollar and is under-performing all of the majors with the exception of GBP and JPY.



The pound Canadian dollar exchange rate is at 1.6068. (P.S - We have updated our FX forecast page at IMT, please visit via this Facebook entry path).

While today is being dominated by issues concerning Greece, Spain and Italy (rising bond yields reflecting investor nerves over the debt position of these countries) this week holds the potential for some domestically-driven movement.

There is the release of international securities transactions (today), wholesale sales (Tuesday), retail sales (Thursday), and CPI (Friday).

According to Eric Théorêt at Scotiabank:

"The two latter releases are the most important for CAD given the outlook for inflation, the dependence on consumption-driven GDP growth in the BoC’s forecast, and the ‘trigger-ready’ tone of the BoC’s monetary policy statements with regard s to the removal of policy stimulus.

"In this environment both oil prices and equity futures are relatively unchanged. We expect today’s range in USD-CAD to fall between 1.0196 and 1.0268."

Elsewhere, the EUR is up 0.2% from Friday’s close, as markets react positively to the outcome of the Greek election while also turning their focus to Spain.

The Greek election results have reduced the potential for a near term exit for Greece, and French deputy elections have afforded President Hollande with the majority required to implement his desired budgetary changes.

However, budget deficit estimates have been raised and many fiscal issues still need to be addressed given that France remains on outlook negative for all three major rating agencies.