George Davis Currency Report | A Canadian Dollar Video Series

George Davis, CMT is the award winning Chief Technical Analyst for Fixed Income and Currency Strategy for RBC Capital Markets. 

 
January 2018

In this installment George highlights recent economic developments, namely the stellar December jobs report, a sustained pickup in wage gains and a very firm Q4 Business Outlook Survey that have led to a forecast change for the BoC heading into 2018.  

RBC CM now expects an additional hike from the BoC at their 17Jan meeting (originally calling for a pause here) and a hike in each of Q2, Q3 and Q4 - essentially adding one more hike to their interest rate profile for 2018.  Although this extra hike should establish a lower ceiling for USDCAD in the 1.2800 – 1.3000 area, with reduced downside risks for CAD, NAFTA still presents some headline risk as contentious negotiations continue 23Jan in Montreal.  

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December 2017

In the December 2017 installment of the George Davis Report, George provides a brief summary of CM's economic outlook for 2018 and the implications to the trajectory of the Canadian dollar.

 
 
November 2017

In the November 2017 installment of the George Davis Report, George reiterates that the current USDCAD corrective phase still has merit into Q1 18 given the recent cautious tone from the BoC.

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October 2017

Don’t miss this month’s edition of The George Davis Report – where George discusses a corrective phase for the Canadian Dollar following the Bank of Canada’s September rate hike as well as the importance of increasing core inflation rates going into 2018.

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September 2017 

In this installment, George Davis, CMT, will highlight some of the changes made to CM's growth, interest rate and foreign exchange forecasts, brought about by the surprise Bank of Canada interest rate hike. If you have any questions about the video or wish to discuss any other Foreign Exchange matters, please contact us.

 
August 2017 

We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets. In this installment, George discusses the differences between technical and fundamental analysis and why CM turned bearish technically on USDCAD prior to updating their fundamental forecast. George also mentions that USDCAD is at its most oversold levels in 3 years, increasing the probability of a correction in CAD over the next 2-4 weeks.

Currently, the market has fully priced in an interest rate hike by the BoC for October and another for April 2018. CM feels that the interest rate market is overdone in this regard and that the BoC will pause in the first half of next year. As these expectations are repriced, we are likely to see some weakness in CAD. 

July 2017

In this installment, George will discuss the surprise shift by the BoC from neutral to a more hawkish bias, citing an up to 2-year lag in inflation and very strong domestic growth over the last three quarters, averaging 3.5%. The BoC now feels that past rate cuts have done their job and the economy has adjusted to lower oil prices. 

With two BoC hikes expected this year (July and October) and with only one more hike from the FED, a more positive backdrop for CAD should result over the short term, hitting 1.27 in Q3 and 1.30 in Q4.  In revising their interest rate forecast for 2018, RBC CM now expects 4 rate hikes from the FED, pushing USDCAD higher as the BoC pauses in Q1/Q2 to assess economic conditions, before resuming in Q3 and Q4.

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June 2017

In this installment, George will discuss the recent strength in Canadian data, culminating with the Q1 GDP report of 3.7%, the third consecutive quarter of above trend growth. Although this is raising the possibility of a BoC hike this year, RBC CM does not expect any rate action until the first half of next year as the Canadian economy still has excess capacity and inflation is below target.

With the Fed expected to hike twice this year and the BoC on hold, this policy divergence should move the USDCAD up to 1.38 in Q3 and 1.40 by year end. CAD strength is expected next year as the output gap closes. 

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May 2017

In this installment, George will discuss the rationale for continued weakness in the Canadian Dollar, (housing market, decline in oil prices, US trade front), including revising the Q4 USDCAD forecast up to 1.40 (from 1.38).   If you have any questions about the video or wish to discuss any other Foreign Exchange matters, please contact us.

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