There were no surprises today, as US economic data came in as expected. They have revised down the amount the US actually shrank during the first quarter of 2015 from -0.7% to -0.2%. While this may not sound like much, half a percent of an economy which produces tens of trillions worth of goods every year is more than enough to turn some heads.
We have written a lot recently about about how much the US economy has a knock-on effect on the Canadian economy, and therefore Canadian Dollar rates. With the US as Canada’s largest trading partner, their performance dictates how confident investors are in the Canadian economy.
So the rates came in as expected, and without any surprises or other pieces of data to be released, the Canadian Dollar held steady today at the historic 7-year highs we have enjoyed recently. However, these rates should be viewed like an elastic band, it can only stretch so far in any given direction before a strong snap-back. The further this stretches, the stronger the snap-back.
I believe there is still some room for the rates to move further of CAD buyers. Data to be released tomorrow about the US economy will tell us more, but next week will also have significant data releases for the Canadian economy, which may be as shockingly low as their retail sector reflected last Friday, causing significant CAD weakness.
However, there are other factors to consider in the meantime. The rates were as high as 1.95 but fell due to a 2% increase in oil prices today, of which Canada is a massive exporter. If this becomes more positive over the coming days, rates could tumble as a potential recovery of their oil export sector is renewed with vigour.
My advice at this point would be to keep reading these posts or email me on firstname.lastname@example.org so that I can provide quicker and more up-to-date information about buying opportunities for the next few days and weeks.