I have been more bullish on the Canadian economy than most. I have expected a higher Loonie because of this. The Loonie has broken above the downtrend line from the May 2015 high and the 50 day moving average is approaching the 200 ma from below. A break above 77US cents would confirm the bullish view.
Lately there have been back to back excellent Canadian employment reports (here and here) although the proportion of part time jobs and the job quality undermines the headline number, however, jobs are being created and not destroyed. Part time jobs can become full time, sometimes.
I think the Canadian economy is catching a tailwind from the reflation theme and that Canada may be the last country on Donald Trump’s hit list. The large sell off in the ratio of the TSX to the S&P500 in late 2015 could be the capitulation of the deflation trend.
The TSX to S&P500 ratio has begun to stall out. Seasonally this trend tends to weaken around the February to March period.
The percentage of TSX stocks above their 50 and 200 day moving averages have made higher lows and are turning back up.
Although the outperformance versus US markets is waning, I expect the Canadian markets to push higher. The situation depicted in the chart below should help.