Daily Economic Commentary: Canada

[PipDiddy]

Just like its national sweetener, the CAD was as sweet as maple syrup… To the bears! Yesterday, USDCAD went on a sugar rush and dashed from an intraday low of 1.0352 only to crash at 1.0478 at the end of the day.

The CAD found itself on the losing team yesterday, as risk aversion wiped out the comdolls.

Adding a bitter taste to the CAD bulls’ mouths was the wholesale sales figure which came in disastrously, posting a 0.1% decline in May. Analysts were quite optimistic with their forecasts for the May figure, anticipating a 0.4% upturn following the 0.2% decrease in sales at the wholesale level in April. In spite of healthy labor market conditions, it seems like consumer spending is still weak. Uh oh!

Could this report be a preview of the retail sales data coming out later at 12:30 pm GMT? Analysts are expecting a turnaround from the 2.0% decrease in retail sales seen in April, by predicting a 0.4% increase in May. For the sake of CAD bulls, let’s hope they get it right this time!

Then at 2:30 pm GMT, investors will finally catch a glimpse of the BoC’s monetary policy report. Just minutes after that at 3:15 pm GMT, the BoC Governor will hold a press conference to discuss the said report. Hopefully, you’ll be able to get an idea of where the BoC sees the Canadian economy going in the coming months. More importantly, they might just reveal how they plan to act in the near future. Stay sharp, folks! An optimistic outlook and hawkish statements might just give you the CAD rally you’ve been waiting for.

[PipDiddy]

Did you see the Loonie drive a Gallardo Pipborghini down the charts yesterday?! USDCAD traded lower after opening at 1.0478 as the 1.0500 handle proved to be a stronger resistance than the bulls imagined. The pair closed yesterday at 1.0393 with an 89-pip win for the Loonie.

The decline in consumer spending in May wasn’t enough so stop the Loonie from cruising up the charts. According to Statistics Canada, retail sales fell 0.2% during the month which disappointed the market’s expectation of a 0.4% growth. But what fueled its rally?

Two things: risk appetite and the BoC monthly report.

The monetary policy report wasn’t exactly spankin’ with optimism but it implied that the BoC was more open to rate hikes than it was back June. BoC Governor Mark Carney cited the country’s growth being near pre-recession levels and that proved to be enough nitro to boost the Loonie. According to him, the bank expects the economy to expand at an annual rate of 3% for the second quarter with cheaper commodity prices and Loonie weakness to help exports.

The pessimism came when the BoC downgraded its GDP expectation for 2010 to 3.5% from April’s 3.7% forecast. It was still all good for the Loonie though as Carney cited the slowdown in global economic recovery being the reason for the revision and not so much about Canada’s domestic economy.

In addition, they also expect inflation to be close to the 2% target. See if today’s CPI report for June agrees with the BoC’s forecast. It is expected to have declined 0.2% in June from the 0.3% increase it posted in May. Core CPI, which excludes volatile items, is also seen to have decreased from 0.3% in May to 0.1% in June. If the actual figures come out better than expected at 11:00am GMT, we may just see the Loonie speedin’ up the pip lane.

[PipDiddy]

The Loonie hitched a ride on the risk appetite train last Friday after the better-than-expected economic reports from euro zone boosted the demand for the comdollars. USDCAD ended the week 32 pips higher than its open price at 1.0361 after an intraday high of 1.0437.

Canada’s economic data might have limited the Loonie’s gains after the CPI for June showed a 0.1% drop from May’s 0.3% growth. The report was a reflection of the retailers’ price cuts to stimulate consumer demand. Hmm, maybe the downbeat remarks of the Bank of Canada (BOC) in their last interest rate hike have merit after all.

Canada will take a break from economic reports until Thursday when the price indices of raw materials and producer prices are released at 12:30 pm GMT. The raw materials are expected to increase by 1.1% this June after the 7.2% drop in May, while the producer prices are estimated to show a 0.6% improvement from May’s 0.3% increase.

Meanwhile, the big monthly GDP report will be released at 12:30 pm GMT on Friday. The economy is expected to have grown by 0.1% in May after the no growth scenario in April.

Keep close tabs on these reports, my friends! Lower-than-expected figures just might support the CPI data which suggested that demand from the Canadian economy is weakening. Uh-oh. Will the BOC finally have an excuse to stop their interest rate hikes?

[PipDiddy]

With no economic reports from Canada to drive it around, the Loonie hitched a ride with risk appetite to make its way up to WinVille! Yesterday’s price action saw the Loonie rise against the USD for the third day in a row as USDCAD dropped from its opening price of 1.0372 to close at 1.0323 at the end of the day.

It joined the ranks of the AUD and NZD in celebration of the comdolls’ victory over the USD. Yea boi! Thanks to steady oil prices and better-than-expected US data that boosted confidence worldwide, the Loonie rediscovered the ability to fly.

It looks like you’ll have to wait another day to get your first taste of a Canadian report for the week. In the meantime, set your eyes south of the border, where the US is scheduled to release their June core durable goods data. If the results of this report come in positive, risk appetite might hit the bellies of investors and drive the Loonie up again! Catch it at 12:30 pm GMT!

[PipDiddy]

“No no Loonie, no no-ooh.” Too bad the Loonie didn’t have the same charisma on investors in yesterday’s trade as the Canadian pop sensation, Justin Bieber, has on the ladies.

USDCAD traded in favor of the Loonie before the New York session started, reaching the intraday low of 1.0256. But it sharply reversed from its tracks and peaked at 1.0396 before it closed the day at 1.0357.

With the absence of economic reports from Canada, it seems like the currency is left to the mercy of the market’s hard-to-predict-eenie-meenie-miney-moe sentiment. The Loonie’s early rally yesterday might have been courtesy of the better-than-expected European data. But the positive US figures probably caused it to lost its gains.

Tsk, tsk. Sorry Loonie bulls, but it seems like this trend is going to continue until we see Canada’s GDP figures for the second quarter on Friday. Good luck on your trades!

[PipDiddy]

Is it time to land on the ground? After experiencing interest rate highs last week, it seems that risk aversion started weighing on the Loonie. USDCAD ascended 42 pips from its open price at 1.0384, while EURCAD ended the day at 84.13 after opening at 84.22.

The lack of economic data from Canada early this week exposed the Loonie to risk sentiment, so the disappointing orders data from the US yesterday didn’t do much for the Canadian dollar.

Of course, it also didn’t help that Canada posted weaker-than-expected retail sales and CPI figures right after Bank of Canada hiked interest rates to 0.75% last Tuesday.

Will the Loonie can gain back some of its strength today? The prices of producers and raw materials are scheduled today at 12:30 pm GMT.

Prices for raw materials are estimated to rise by 1.1% this June against May’s 7.2% decline, but producer prices are expected to sustain its 0.3% growth. Weaker-than-expected figures for both reports might support the BOC’s statements that economic growth remains weak despite the increase in interest rates.

[PipDiddy]

The Loonie pip-trotted on the bulls’ turf last Friday despite weaker-than-expected GDP figures for the second quarter. USDCAD grooved to an intraday high of 1.0376 before the Loonie stepped-up and led the pair to the week’s close at 1.0282.

Fortunately for the Loonie, price action was dancing to the tune of risk appetite last Friday. Canadian economic growth fell short of the market’s 0.2% expectation when it only printed at 0.1%. According to the report by Statistics Canada, the weakness in the service sector weighed down the hustle that the export sector showcased during the month.

Yikes! I guess the Loonie got a lucky that US GDP also disappointed expectations and grabbed the spotlight. Investors probably figured that Canada’s economy is groovin’ better than that of the US.

Our economic calendar is blank for the Loonie today so be on your toes for news reports that could offset the market’s appetite for risk. Good luck on your trades!

[PipDiddy]

Choo choo! All aboard the Loonie train! USDCAD traded lower yesterday after reaching an intraday high of 1.0302 at the start of the Asian session. It hustled all the way down to its six-week low at 1.0204, before closing the day with a 51-pip gain for the Loonie. Whoot whoot!

Without any Canadian report on tap until Friday, I guess the Loonie will have to rely on the market’s risk sentiment in snatching pips from its counterparts as it did yesterday. Luckily, it was risk appetite guiding price action and not risk aversion!

The hustle in the commodity market yesterday may have also helped the Loonie impress the bulls. Crude oil, Canada’s largest export, sold at $80 per barrel which boosted the currency’s rally. The Loonie tends to follow the direction of crude oil prices as it is Canada is a major exporter of the commodity.


So keep tabs on crude oil as it will help you gauge which direction the Loonie will trade today. Good luck!

[PipDiddy]

BORRRINGGG!!! With no major catalyst to spark any moves, USDCAD stuck within a tight range of just 18 pips! The pair finished exactly at it’s opening price of 1.0238.

Once again, no data will be released from Canada today. But that doesn’t mean that we’ll be in for a snoozer. Watch out for news coming out from the US, as the ADP employment and ISM services PMI reports are both scheduled for release. Both of these are high impact reports, so be on your toes when trading the US session tonight!

[PipDiddy]

Unchartered territory! Okay fine, not really unchartered, but it’s been awhile since USDCAD dipped below the 1.0200 mark. The Canadian dollar hit a 6 week high, as USDCAD fell over 60 pips to close at 1.0177. Another step back towards parity perhaps?

Despite the strength of the dollar versus the euro and pound, com-dolls like the Loonie lorded it over the currency markets yesterday. It seems that risk appetite is strong and that commodities are doing well. Things could get hectic today though, as we’ve got interest rate decisions from both the BOE and ECB. Who knows what effect these two events could have on risk sentiment!

On the Canadian front, building permits data will be released at 12:30 pm GMT. Building permits are projected to have increased by 1.2% in June. After last month’s crazy fall of 10.8%, any figure indicating growth would certainly be good news.