USD/CAD - Dollar Sidelined in Very Tight Trading Ranges

The Canadian dollar is not heavily traded in offshore markets, but price movements in Asia and Europe overnight have been minimal even in the face of a crude oil price which has traded in an 80-cent range over the past 24 hours. The Canadian dollar spent all of Monday trapped in a range from $1.2848 U.S. to 1.2878; shrugging off a fall in oil prices but failing also to get any real traction from Bank of Canada Governor Stephen Poloz’s call on interest rates that, "We need to get ourselves up there for real, and to the 2% zone, so we have room to manoeuvre for the next shock that comes along."

After an overnight trading range in Asia which saw USD/CAD stuck between $1.2860-$1.2873, the loonie strengthened very marginally in Europe as oil prices rose and ahead of the release of a clutch of domestic economic data this week. Wednesday is wholesale trade, Thursday is Consumer Price Index and retail sales and on Friday it’s the monthly Gross Domestic Product numbers for October.

Yesterday, we learned that foreign investment in Canadian securities reached $20.8 billionn in October, up from $16.7 billion in September. Overall, foreign investors acquired Canadian bonds and, to a lesser extent, equities but reduced their exposure to money market instruments. Non-resident investors purchased $6 billion of federal government bonds, a fourth consecutive month of significant investment. Since July, foreign investors have increased their holdings of federal government bonds by a very impressive $27.8 billion.

On the other side of the ledger, Canadian investment in foreign securities reached $16.5 billion in October, the highest investment since December 2015. Canadian investors acquired $14.2 billion of foreign equities, following acquisitions of $1.1 billion in September. The bulk of the investment was in US shares; a pretty good call given that the Dow Jones Industrial Average on Monday hit its 70th record close of the year.

The Canadian Dollar opened in North America this morning at USD/CAD $1.2860 with GBP/CAD at $1.7200.

USD/CAD: Expected Range $1.2850 - $1.2885

Enjoy significant savings and excellent service when transferring funds with