Daily Economic Commentary: Canada

[PipDiddy]

We’re going down down in an earlier round, but sugar, we AIN’T goin’ down swingin’! The Loonie hardly put up a fight against the Greenback yesterday. Then again, after seeing Canada’s horrendous economic data, could we really blame it? USDCAD made a 103-pip leap up the charts to close at 1.0391 at the end of the day.

Although risk aversion wiped out most of the other currencies, the Loonie took a particularly strong hit because of poor economic data.

First off, the leading index for the month of July printed much worse than expected as it gave a reading of 0.4%, almost half of what was forecasted. In fact, results were so bad, analysts decided to downgrade the previous month’s reading from 1.0% to just 0.7%! This report is usually used to gauge the overall trend in the economy. Obviously, things aren’t looking so well in Canada.

At the same time, Canada’s wholesale sales did the exact opposite of what was expected. Forecasts were for a 0.4% uptick, but instead, the month of June decided to go the other direction and record a 0.3% downtick! Could this be another sign of an economic slowdown?

Let’s see if today holds more bad news for the Loonie. At 11:00 am GMT, Canada is set to unveil its CPI figures. Will July print an upside surprise and boost the Loonie by exceeding expectations of a 0.1% increase in prices following June’s 0.1% decline? Or will it send USDCAD higher up the charts by printing below forecasts? Stay tuned, folks!

[PipDiddy]

It’s no magic trick, folks! Canada’s CPI report last Friday proved that what you see isn’t always what you get. Last month’s CPI surpassed analyst expectations, but traders paid more attention to the decline in core CPI. This caused the Loonie to lose across the board, with USDCAD reaching an intraday high of 1.0515 before ending the week at 1.0488.

Higher gasoline prices and a spike in consumption tax boosted July’s CPI to a 0.5% growth from a 0.1% rise last June. Too bad that core CPI, which excludes volatile goods like gas prices and tax effects, unexpectedly dropped for the second month in a row by 0.1%. This signaled less inflationary pressures for the BOC to raise their interest rates from 0.75% on their next monetary policy meeting, and drove away the Loonie bulls.

Will the Loonie have a chance at paring some of its losses last week? No report from Canada is on tap today, but keep your eyes peeled for the retail sales report tomorrow at 12:30 am GMT. Analysts expect a 0.4% improvement in June’s retail sales after declining by 0.2% last May, but a worse-than-expected figure might attract more Loonie bears despite its oversold conditions across the charts.

[PipDiddy]

Going once… going twice… it’s still not sold! Rumors of two other companies countering Australian company BHP’s offer to buy Canadian company Potash might have provided support for the Loonie early in the day, but global growth concerns soon caught up with the Canadian dollar.

USDCAD closed 7 pips away from its intraday high at 1.0523, while CADJPY ended its 64-pip fall at 80.95.

The Loonie’s bulls and bears will have something more than the takeover bid to feast on today when the retail sales report for June is released at 12:30 pm GMT. The figure is expected to increase by 0.4% after dropping by 0.1% last May, while the core retail sales is estimated to show a 0.1% growth. Will the data mirror the better-than-expected retail sales from fellow commodity-related New Zealand? Keep your eyes glued to the tube!

[PipDiddy]

Timbeeeeeer! Down went the Loonie as weak retail sales and risk aversion chopped down Loonie bulls’ hopes. USDCAD flew 80 pips up the charts and perched at 1.0603 at the end of the day.

Canada’s latest core retail sales report was absolutely dismal. There’s really no way to sugarcoat it! Core retail sales declined a staggering 0.5% in June, marking its third consecutive monthly drop. Not only did it fall short of expectations of a mere 0.1% uptick, but June fared even worse than the previous month which posted a 0.3% decrease! It seems like Canadians have really been keeping their money in their pockets!

With no high-impact reports on tap in Canada today, you’re best off monitoring risk sentiment since it seems to be the driving force behind markets lately.

You may also want to check out the US core durable goods orders data at 12:30 pm GMT and their new home sales report at 2:00 pm GMT for your daily report fix. Those two are hard-hitting and can potentially trigger another bout of risk aversion with worse-than-expected results, so stay sharp!

[PipDiddy]

Despite another round of weak US economic figures, USDCAD was unable to bust through the resistance around 1.0660. CADJPY also put up a strong fight as it rallied from the 79.00 area and closed at 79.51.

Weak US data sparked another round of risk aversion yesterday, pushing USDCAD to retest its previous day high. Canada didn't release any major economic reports yesterday.

Canada's economic schedule is blank again for today, which means that the Loonie could be driven by risk sentiment once again. Will USDCAD finally be able to break above the 1.0660 area? Well, if US prints a disappointing jobless claims report, risk aversion could push USDCAD higher once more. So stay tuned for the release of the jobless claims data at 12:30 pm GMT!

[PipDiddy]

The Canadian dollar finally had something to smile about, as it ended its 5-day losing streak versus the dollar yesterday. USDCAD fell 53 pips from its opening price to finish the day at 1.0567. Could this just be a breather before buyers come back push price back up?

No data will be coming out from Canada again today, but that doesn't mean you can kick back, relax and play hockey all day long. Watch out for any sudden moves to end the week, as you never know what might hit the currency markets!

[PipDiddy]

The Loonie got some investor lovin’ last Friday as it gained 42-pips against the dollar. But posting its second consecutive win wasn’t as easy as pie. USDCAD hit an intraday high of 1.0649 before it closed at 1.0524. Whew! I guess it got lucky when currency traders found more flaws on the dollar than they did on it.

See today if the Loonie will get a happy-ever-after ending on the charts with today’s economic reports. At 12:30 pm GMT, we have the industrial product price index which is expected to print at 0.4%, and the raw materials price index which is seen to have been up 0.2% in July.

Adding to that, we have the current account figure for the second quarter on tap and analysts are expecting a 10 billion CAD deficit. Uh oh.. This doesn’t sound good for the Loonie because this would indicate that foreigners made fewer transactions in Canada in the second quarter than they did during the first one, when the reading was at -7.8 billion CAD.

Make sure you stay tuned to these reports later as they may just reel you in some pips! And oh, before I forget, take note that Canada’s June GDP is set to be released tomorrow. At 12:30 pm GMT, the market is expecting to see a 0.1% growth in the economy with the consensus up at 0.2%.

[PipDiddy]

Oh, Loonie! You’re gonna send Loonie bulls to the loony bin with the way you’ve been acting! To the dismay of Loonie fans, USDCAD quickly scrambled up the charts as Canada released mixed data alongside the US’s worse-than-expected reports. At the end of the day, the pair closed 104 pips above its opening price of 1.0500.

On one hand, the RMPI report, which measures the change in the prices of manufacturers’ raw materials, posted a 1.8% uptick in July following a 0.2% downtick in June. This was a pleasant surprise as analysts only forecasted a 0.3% increase.

On the other hand, Canada’s current account seems to be faring much worse than expected. Yesterday, investors learned that the country’s trade deficit widened from 8.5 billion CAD to 11 billion CAD in the second quarter of the year, instead of just 10.7 billion CAD as expected.

It seems like weakening demand from the US, which is Canada’s largest trade partner, has been taking its toll on Canada’s exports. Will we see this reflect in June’s GDP figures due at 12:30 pm GMT? Analysts are predicting a 0.2% growth in the economy after seeing a modest 0.1% expansion in May. Watch out for worse-than-expected results that could spark a Loonie sell-off!

[PipDiddy]

“They got nothin’ on you, Loonie…,” sang the traders yesterday as they dumped it in exchange for the dollar. After kick-starting the day at 1.0605, USDCAD dipped to its intraday low of 1.0575. Little did the Loonie know that that was going to be the highlight of its day. Tsk, tsk. The pair then hustled to its 8-week high at 1.0673 before ending the day with a 9-pip loss.

So, what caused the Loonie’s heartbreak?

Well, for one there was the GDP figures for the second quarter. According to Statistics Canada the economy grew 0.2% a monthly basis and hit the consensus. The problem was, on an annualized basis, it seems like the Canadian economy didn’t flex its muscles enough to meet expectations as it only grew 2.0% and missed the 2.5% forecast. Ouch! What made it even worse was that its previous reading was revised down to 5.8% from 6.1%. This intensified speculations that we may not hear an interest hike from BoC on September 8 when it makes its policy announcement.

It also didn’t help that crude oil delivery for October, one of Canada’s biggest export, declined 3.7% yesterday to 71.92 USD. Tsk, tsk. I guess risk aversion really messes up with the Loonie’s pip mojo huh?

We don’t have anything on tap for the currency today so you better make sure you get a feel of the markets risk sentiment before you make your Loonie trades. May the pips be with you!

[PipDiddy]

Well look who’s been sneaking around and stealing pips! Despite the lack of domestic economic data, the Loonie was one of yesterday’s big winners. USDCAD dove 134 pips down the charts and settled at 1.0521 at the end of the day.

The Loonie don’t need no Canada news to boogie, yo! It’s cool like that! Instead, it just chilled and rode the wave of risk appetite brought about by positive manufacturing data from China.

Oil prices brought further joy to Loonie bulls as it rose almost 3% yesterday. Oil is one of Canada’s biggest exports, so its economy stands to benefit when oil prices rise.

It looks like we’ve got another quiet one in Canada today. No reports again! But that doesn’t mean the Loonie will be sitting out on all the action. It might fly further up the charts if risk appetite improves. That’s just how it rolls!