Daily Economic Commentary: Canada

[PipDiddy]

After its bitter performance yesterday, I think the CAD’s gonna need a bit of maple syrup to sweeten up! USDCAD rose from an intraday low of 1.472 to 1.0535, making the CAD the only comdoll that wasn’t able to hold off the Greenback.

The AUD and NZD were able to move up and oil prices rose, but still the CAD slid. What gives?!

Some say its drop was because the markets might have overdone the CAD buying the other day. They say it’s sort of hard to justify such a strong CAD with worries arising over the US’s NFP data, and Canada facing threats of an economic slowdown itself. After all, the US is Canada’s largest trading partner, so if its southern neighbor goes down, it will probably come along for the ride.

If you have plans on trading USDCAD today, you’d better not miss the US’s NFP report at 12:30 pm GMT. This is one of the hardest-hitting reports out there and could potentially spur a strong round of risk aversion if it prints worse-than-expected figures. Be safe out there, kids!

[PipDiddy]

Oh la la Loonie! Canada’s currency was able to end the week with a win against the dollar for the first time in three weeks as USDCAD closed 140 pips higher at 1.0395 last Friday!

We didn’t have anything on tap for the Loonie but it seems like the anti-dollar sentiment of the market was enough for it to hustle. Boo yeah! But with Canadians taking a break from the markets today, enjoying the last few days of summer, will the Loonie be able to hold on to its gains?

Err, let's see... I guess we’ll just have to keep tabs on the charts to find out.

On Wednesday we have the BoC’s policy announcement at 1:00 pm GMT. Some analysts are betting that the BoC won’t be hiking rates for the third consecutive month with the country’s trade deficit ballooning, core retail sales slumping, and growth slowing. But there are those who remain optimistic and still expect a rate hike from the central bank.

Traders will be watching this closely so it would be wise for you to do the same. Good luck and happy trading!

[PipDiddy]

The Loonie obviously missed the presence of most US and Canadian traders who were off enjoying their Labor Day holiday yesterday. Price movement was relatively limited, with the Loonie slowly trying to score a few gains agains the Greenback. USDCAD started off at 1.0393 and closed at 1.0352.

Canada's economic schedule is still empty but, now that traders are back from the long weekend, USDCAD could see a little more action today. No economic catalysts are due from the US as well but there are plenty of reports set to be released from other major economies so expect to see more volatility today. Stay on your toes!

[PipDiddy]

After lingering around 1.0350, USDCAD was pushed back towards the 1.0500 area as risk aversion prowled the markets yesterday. But with today's set of economic reports from Canada, would the Loonie get back in stride?

When a Wall Street Journal report revealed that some European banks understated their debt holdings, many traders started to think that the debt situation in the euro zone is much worse than the stress tests reported. This sparked a flight to safety, eventually forcing the comdolls to give back their recent gains.

However, Canada's got a full schedule today and this just might give the Loonie enough strength to rally. First up, building permits data are set for release at 1:00 pm GMT. This report is expected to show that building permits slid by 4.2% in July, erasing part of the 6.5% gain seen last June. Around the same time, the BOC will make its monetary policy decision and this might overshadow the effect of the building permits data. If the central bank hikes rates by 0.25% as expected, USDCAD could sink back to the 1.0350 area once more. But if BOC officials downplay the prospect of another rate hike in the future, the Loonie's gains could be limited.

After that, Canada will release its Ivey PMI reading at 2:00 pm GMT. This manufacturing index is slated to rise from 54.0 to 55.9 in August, signaling a stronger expansion in the industry. A better-than-expected figure could boost the Loonie further.

[PipDiddy]

Soaring, flying, there wasn't a pip that the Loonie could not reach in yesterday’s trading! USDCAD spent the early part of the day chillin’ just below the 1.0500 handle. After the BOC announced its interest rate decision, the bears took over and drove the pair down to an intraday low of 1.0346 before ending the day at 1.0375 with the Loonie scoring a 133-pip win. Whoohoo!

As you probably know by now, the Loonie’s flight on the charts yesterday was largely because of the BOC’s third consecutive rate hike which puts Canada’s cash rate up to 1.00% from 0.75%. Mighty sweet, eh?

To make things even sweeter, traders found the tone of the central bank’s statement less dovish than what they had been expecting. Despite the disappointment of the recent economic data from the country and the US recovery slowing down, the BOC dudes are wide-eyed and hopeful that consumer spending and business investments in the country will keep hustlin’.

And true enough, an hour after the BoC’s announcement, the Ivey PMI report showed that Canada’s manufacturing sector expanded at the its fastest rate since July 2008! The figure came in at 65.9 beating the consensus which was only at 55.9. Boo yeah!

Some traders are expectant that positive vibes for the Loonie didn’t end there. They’re thinking that with the sharp increase in manufacturing activity, there’s a good chance that the trade balance report for July will beat the -0.8 billion CAD consensus. But then again, they could be wrong. Tune it to that later at 12:30 pm GMT.

Along with that, we also have some real estate reports on tap. The number of residential buildings that started construction in July is seen to have declined to 185,000 following June’s 189,100 reading, and the housing price index is anticipated to have remained flat at 0.1% during the month.

[PipDiddy]

For the second day in a row, the Loonie was able one-up on the Greenback. In spite of weaker-than-expected Canadian data, USDCAD still managed to end the US trading session lower at 1.0337 from its Asian session open price of 1.0375. It looks like the Loonie bulls are still feelin' the love from the BOC rate hike last Wednesday!

The report on Canadian housing starts was only at 183,300 (annualized) instead of 185,000 like initially predicted. It was also significantly lower from July's 188,900. Meanwhile, the country's trade balance, which was slated to print 800 million CAD deficit, showed a huge 2.7 billion CAD deficit. Apparently, imports exceeded exports by a huge margin in July and caused the deficit to bloat up!

Whether the Loonie's bull run will continue or not will depend largely on the results of the unemployment report later today. Scheduled to come out at 7:00 pm GMT, the report is expected to show that a 30,000 net jobs were added in August, while joblessness remained at 8.0%. If the actual figures come in better, we could see the Loonie close out another winning day against the Greenback!

[PipDiddy]

“It’s so fluffyyyyy!!!” cried the markets last Friday, and no, it’s not because of a unicorn. Apparently, the Loonie bears on got all excited at Canada’s fluffed up employment figures. USDCAD leveled off to its 1.0352 closing price after dropping to an intraday low of 1.0288. Meanwhile, EURCAD rose to an intraday high of 1.3200 before ending the week at 1.3158.

Canada reported an additional 35,800 workers in the labor force, but the unemployment rate rose to 8.1%. What’s up?! As my market groupies told me, the increase in workforce was largely due to the education sector making up for the job losses posted in July. If we remove the education sector, jobs numbers would actually post a decline! Tsk tsk.

Let’s hope this week will be cuter for the Loonie! The action will start tomorrow at 12:30 pm GMT when Canada releases its labor productivity numbers for the second quarter. The number is expected to increase by 0.9% from the first quarter’s 0.8% growth, but the latest employment figures might have weighed on the data.

Bank of Canada Governor Mark Carney will also make headlines tomorrow at 3:00 pm GMT when he gives a press statement at the Deutsche Bundesbank in Berlin. Will he give clues on the impact of the recent interest rate hikes on their economy?

Also keep your eyes open for the manufacturing sales data on Wednesday at 12:30 pm GMT. Market geeks expect the figure to remain at July’s 0.1% growth but a better-than-expected figure might signal that Canada is getting some action from Australia and China’s good economic data.

[PipDiddy]

The Loonie, along with its commdoll homies, strut its swagger on the charts yesterday. Holler! After opening the week at 1.0326, USDCAD went on a downtrend all the way to the day’s close at 1.0274.

Thanks to better-than-expected industrial production figures from China, the Loonie was able to get its pip-groove on. Hmmm, I wonder if there’s enough risk appetite left in the market to launch the Loonie into another rally against the dollar.

Anyway, today we have a few economic on tap for the currency which may help use gauge which it will take on the charts. At 12:30 pm GMT, we have the motor vehicle sales report which is expected to show a 1% increase in July, and the capacity utilization rate which is anticipated to come in at 75.5%. Along with those, we also have the labor productivity index which is seen to have declined by 0.5% during the second quarter.

Bear in mind that these are only secondary reports and may have very limited impact on the Loonie. You may want to keep tabs on the US retail sales report which is also scheduled at 12:30 pm GMT as this may cause some volatility in FX hood, yo!

[PipDiddy]

The Loonie was the only one in the Commdoll hood which was unable to bring home the bacon yesterday as USDCAD ended the day three pips higher at 1.0277. Tsk, tsk..

Perhaps it was because of the mixed economic reports that we saw from Canada. Motor vehicle sales posted an upside surprise when July’s figure came in at 2.4% and beat the market’s consensus which was only at 1.0%. That was a “Yey!” for the Loonie but then there was the labor productivity index for the second quarter from which it got a “Boo!” According to Statistics Canada, average labor productivity output per hour printed a 0.8% decline which was worse than the 0.5% contraction that analysts had braced for.

I wonder if the Loonie will be able to hustle its muscle on the charts with today’s report on manufacturing sales due at 12:30 pm GMT. Analysts are expecting to see a modest increase of 0.2% in July following June’s 0.1% reading. If the actual figure beats the consensus, then we may just see the Loonie rally again!

[PipDiddy]

Whew! Saved by the USDJPY bells! The Bank of Japan’s currency intervention also boosted the Loonie against both the dollar and the yen, and made it easy for traders to shrug off Canada’s bad economic data. CADJPY soared by 253 pips at 83.38, while USDCAD finished the day at 1.0265 after hitting an intraday high of 1.0321.

Yesterday we saw that Canada’s manufacturing sales for July dropped by 0.9% after falling by 0.1% in June. This put a crease on the Loonie bulls’ faces as an increase of 0.2% was expected. Talk about timely intervention!

Will the Bank of Canada (BOC) give thanks to the Bank of Japan? Maybe not. But today at 12:00 am GMT we’ll hear from BOC Deputy Governor Timothy Lane as he gives his speech at the Board of Trade in St. John’s. Let’s hope he brings good news!