The Canadian dollar has posted slight gains in the Thursday session. Currently, USD/CAD is trading at 1.3094, down 0.15% on the day. On the release front, Canada housing starts are expected to climb to 199 thousand. As well, the New Housing Price Index is forecast to tick higher to 0.1%. In the U.S., all eyes are on the Federal Reserve, which winds up its policy meeting and releases a policy statement. On Friday, the U.S releases Producer Price Index reports and UoM Consumer Sentiment.
Canada’s economy remains strong, and this was underscored on Thursday by a superb reading from Ivey PMI, a key gauge of economic activity. The indicator surged to 61.8 in November, up sharply from 50.4 in October. This reading easily beat the estimate of 50.9 points. Earlier this week, Bank of Canada Governor Stephen Poloz said that the Bank would continue gradually raising rates from the current 1.75% to a “neutral stance” of between 2.5% and 3.5%. The magic question for investors is how quickly the BoC will move in this direction. The BoC has raised rates some five times in the past 15 months, and upcoming rate hikes will help make the Canadian dollar an attractive option for investors.
Global stock markets reacted with relief on Wednesday, after the conclusion of the U.S midterm elections. Major indices on Wall Street were up by about 2 percent, as the uncertainty over the election is over and the slugfest ended up as a split-decision. The Democrats won back the House of Representatives, but the Republicans held on to the Senate. Had the Democrats taken back both houses of Congress, Trump would have been a lame duck for the next two years, and he would have had great difficulty passing any further market-friendly reforms. With risk appetite remaining steady, the Canadian dollar has managed to hold its own this week.