Oil prices hit six month highs on the back of US tightening Iran sanctions. Stronger oil prices could have a positive impact on C$, but so far the response has been minimal. Our bias remains to buy US$ on dips against C$, with BOC expected to keep rates on hold at Wednesday’s meeting, we don’t see a lot of reasons why we should break through current range lows.
Euro’s weak manufacturing numbers last week and the potential future trade implications related to the tightening of Iranian sanctions suggests a continued US$ bullish scenario. UK parliament are back today, so Brexit discussions should take centre stage again. Speculators are starting to turn bullish on the GBP, but until a decision on Brexit is made it could be a little premature.
No key data is expected until Friday, until then we should see see a bias to strong US$.