Daily Economic Commentary: Canada

[PipDiddy]

What a way to end September! After experiencing a three-day slide against its southern neighbor, the Loonie fought back against the Greenback to force USDCAD lower. The pair dipped from its opening price of 1.0340 to reach a low of 1.0231 before it finally took a chill pill and rested at 1.0289.

Talk about overcoming adversity! The Loonie had to hurdle over a 0.1% decrease in GDP in July to overcome the Greenback. Though analysts were right on the money when they predicted a 0.1% decline after seeing a 0.2% uptick in June, the latest results are still a bit disappointing since it marks the first GDP contraction in 11 months.

It looks like the BOC will have even less reason to hike rates in 2010 since Canada is still battling anemic domestic demand and a growing trade deficit. But BOC Governor Carney refuses to feel overly pessimistic over this. In his speech yesterday, he said he expects the economy to continue chugging along, but at a modest pace. Way to look on the bright side!

No more reports from Canada today. For now, keep an eye on risk sentiment and oil prices, since they can move the Loonie in the absence of any reports. You can also check out what the US has in store for us as they’re set to publish a few headliners of their own.

[PipDiddy]

No mercy! The Loonie was simply ruthless against its American counterpart last Friday. For the second day in a row, forex geeks chose the Loonie over the Greenback as USDCAD ended 87 pips lower at 1.0202.

It seems like no one wants the Greenback these days. They dumped it for the Loonie even though Canada didn’t release any reports.

Don’t fret, my forex bros. Canada plans to make up for it this week.

The action starts on Wednesday when the Ivey PMI report comes out at 2:00 pm GMT. Investors like to keep an eye on this one because it gives a good idea of the general health of various industries in Canada. Back in August, the report printed a reading of 65.90. But most analysts say we’ll probably see this fall to just 62.00 in September.

Then on Thursday, we take a look at Canada’s building permits report, which is expected to show a 2% decline after July recorded a 3.3% drop. Keep tabs on this one, folks. Since it measures the change in the number and value of new building projects for construction, it’s a good indication of future growth and activity in the construction industry. That being the case, higher results are usually bullish for the currency. Tune in at 12:30 pm GMT to catch the report.

Capping the week off on Friday, we have Canada’s employment figures at 11:00 am GMT. Analysts say we should expect to see a net increase in employment of 10,000 in September after August posted a 35,800 uptick. If they’re right about this, it should help bring down the unemployment rate from 8.1% to 8.0%, just as they predicted.

A few hours after that, we should be seeing the housing starts numbers for September. The annualized number of new houses that began construction is expected to have cooled down from 183,300 to 179,500.

With so many hard-hitters lined up for the week, will we finally see USDCAD bust out of its range?

[PipDiddy]

The Loonie got as much thumbs downs in yesterday’s trading as Tyra Banks did when she wore a fishnet stocking over her face. Ha! USD/CAD ended the day 25 pips higher at 1.0221, after bottoming at 1.0180.

With no economic hollers from Canada yesterday, the Loonie was left vulnerable to the dollar’s strength. But don’t fret! Tomorrow we have the high-caliber Ivey PMI report at 2:00 pm GMT which will most probably rock the Loonie’s path on the charts. Analysts are bracing to see that manufacturing activity slowed in September with the forecast down to 62.0 from its 65.9 reading in August.

For today, we have BOC Senior Deputy Governor Macklem’s speech entitled “Reflections on Monetary Policy After the Great Recession” at 5:00 pm GMT. You may want to tune in to that as he might drop some hints about the bank’s future policy decisions.

[PipDiddy]

“It’s my turn!” screamed the Loonie as it arose victorious against the USD yesterday. It managed to bounce back from its loss to the USD at the start of the week to push USD/CAD lower. At the end of the day, the pair closed 48 pips lower at 1.0173.

No reports were released from Canada but USD weakness helped make the Loonie more attractive to investors. In addition to that, rising commodity prices also gave it a boost. Com doll power!

In other news, BOC Senior Deputy Governor Tim Macklem sided with the US and predicted bad things to come for the global economy is China doesn’t allow the yuan to appreciate enough. He also expressed concern over the possibility of QE part 2 in the U.S. Don’t forget, the US is Canada’s largest trade partner, so any economic changes in the U.S. may have a heavy impact on Canada as well.

Today, Canada is scheduled to roll out its Ivey PMI report. Analysts weren’t feeling September’s performance as much as they did August’s and say the report will likely record a drop from 65.9 to 62. Still, this decline isn't as bad as you would think. After all, it's still well above a reading of 50, which is indicative of expansion. Tune in at 2:00 pm GMT to see the actual results!

[PipDiddy]

Throw your hands in the air and wave ‘em like you just don’t care if you’re rooting for the Loonie! All it needed to forge a new 5-month high against the Greenback was a positive Ivey PMI report. USD/CAD plummeted 64 pips for the day to finish at 1.0109 after it had hit an intraday low of 1.0063.

Yesterday’s release of the September Ivey PMI sent the Loonie less than a penny away from reaching parity with the Greenback. Analysts crunched some numbers and said last month would earn a reading of 62 after seeing a 65.9 in August. However, results came in much better than expected as last month’s performance earned a reading of 70.3. As an important measure of business sentiment, the report recorded its second straight uptick, providing further evidence that things are picking up in Canada.

Canada is releasing another potential market-mover today. Its building permits report is scheduled to hit the stands at 12:30 pm GMT. The number of new building projects authorized for construction is anticipated to fall another 2.0% in August following the 3.3% drop in July. Since the report reflects growth in the construction industry, you ought to stay on your toes and be ready for a Loonie rally just in case results come in better than expected.

[PipDiddy]

The Loonie’s gains against the dollar disappeared like honeybees on a rainy day during the New York session. USD/CAD hit rock-bottom at 1.0078 during yesterday’s trading, before it soared to its intraday high at 1.0212. It then ended Thursday at 1.0186 with the Loonie nursing a 78-pip loss against the dollar. So, what’s the buzz?

Well, aside from investors locking in profits ahead of the NFP report, there was also the bad figures from the country’s construction sector. The number of new building projects authorized for construction in August fell by a whopping 9.2%! This might have ticked off a few Loonie bulls because the forecast was a softer decline at 2.0% following July’s -3.8% reading.

I wonder if the com-doll will get a boost from the economic hollers we have on tap for it today. At 11:00 am GMT, market participants are expecting to see the labor market to have added a net total of 10,000 workers in September while the rate of joblessness projected to have remained at 8.1%. Then just minutes before the NFP at 12:15 pm GMT, we’ll get a sneak peek on the country’s housing market. Analysts are anticipating to see that 179,000 residential buildings started construction in September.

If you’re planning to go long on the Loonie, you better keep your fingers crossed for better-than-expected figures as these may be bullish for the currency.

That’s all folks! Be extra-careful with your trades today, aight?

[PipDiddy]

Thanks to the contrasting results between the data from Canada and the U.S., the Loonie was able to post some sweet gains over the Greenback last Friday. USD/CAD closed the week at 1.0113, down 65 pips from its opening price in the Asian session.

The number of Canadian housing starts in September, which was initially expected to be 186,400 (annualized), was actually 186,000. In addition, the unemployment report covering the same period showed that joblessness fell to 8.0% from 8.1% the previous month.

Not all news was good though. The Canadian unemployment change revealed that companies shed a net number of 6,600 versus the 10,000 gain expected.

While the positive data helped the Loonie last Friday, it also lowered the possibility of a rate hike from the BOC in its next meeting.

With Canadian banks on holiday mode, the economic calendar presents very little event risk. Do still be careful though, as the low level of liquidity could cause some sudden spikes in volatility. You don’t want to get whipsawed!

[PipDiddy]

What a boring day it was for the Loonie yesterday! With most traders out on holiday, USD/CAD found no reason to move. The pair only managed to crawl up to 1.0138, just 40 pips higher from its week open price.

Hmmm, with no real economic catalyst on Canada's economic calendar again, today's trading sessions could prove to be another boring one. But, as I've said yesterday, do be careful! Thin liquidity means price is susceptible to sudden volatility spikes, which could lead to massive whipsaws.

The market will probably be back in full swing tomorrow, when traders come out of their long holiday and high-profile economic reports start coming in. Hope you can stay awake till then. Hah!

Volatility will probably return tomorrow, when traders come out of their long holiday and Canada releases its report on house prices.

[PipDiddy]

“Greenback’s got nothing on you Loonie,” sang traders yesterday as the com-doll pared most of the pips it lost on Monday against its counterpart. After hitting an intraday high of 1.0184, USD/CAD went on a downtrend and ended the day 31 pips lower at 1.0107, just a few pips above the week open price.

Without any economic reports to tune in to, both bulls and bears were all ears for Finance Minister Flaherty’s speech yesterday. Lucky for the Loonie, the market found the official’s remarks positive enough when he said that Canada is in no need of stimulus. Boo yeah!

However, Flaherty also expressed concern for Canada’s economic growth. Yikes! He said that he and his homies will keep a close eye on how the economy behaves. So I think would be wise for us to do the same, starting with the house price index for August which is due later at 12:30 pm GMT.

The market is bracing for a second month of decline in house prices with the forecast still down at -0.1%. If you plan on betting your pips on the Loonie, you may want to keep your fingers crossed for the actual figure to come in higher than the consensus, as this would imply that Canada’s housing industry is A-okay!

[PipDiddy]

“But I won’t stop until those pips are mine… papa-paparity,” sang the Loonie yesterday as it tapped its six-month high against the dollar at 1.0012. USD/CAD found some support at its intraday low and bounced a little to end the day at 1.0048, giving the Loonie a 59-pip gain.

Thanks to a better-than-expected economic report, the com-doll was able to continue on its advances against the dollar. Boo yeah! Statistics Canada reported yesterday that house prices increased by 0.1% in August which might have been a pleasant surprise to some as analysts advised the market to brace for a 0.1% decline.

I have a feeling that if the trade balance report for August impresses traders later at 12:30 pm GMT, there’s a good chance that the Loonie will be able to strut its swagger even past parity! Take note that analysts are expecting to see that imports outpaced exports by 2.3 billion CAD during the month. May the pips be with ya!