Canadian dollar strength remains, though declines in the USDCAD pair appear to have taken a breather as the end of a two-day strike at Nigeria’s state-run oil company led crude for July delivery to fall as much as 1.3 percent to $64.36 a barrel in after-hours trading on the New York Mercantile Exchange.
Furthermore, major event risk for the currency this week could help initiate a turn for USDCAD. First, the Bank of Canada is anticipated to leave rates steady at 4.25 percent, but markets are also expected a hawkish policy statement as inflation remains elevated. Should the central bank actually signal that they are content with leaving rates steady or foresee a drop in CPI in the near-term, bulls may turn their back on the severely overbought Canadian dollar. On the other hand, an overtly hawkish Bank of Canada policy statement followed by an expected surge in first quarter GDP on Thursday could prove to be disastrous for USDCAD, as Loonie bulls will continue to reign. The high-yielding Australian and New Zealand dollars, on the other hand, will likely take their cues from Australian economic data as well as commodity price action. Retail sales and the trade balance are both predicted to improve upon release this week, though the appreciation of the Australian dollar could put exports - and thus the trade balance - at risk.