Daily Economic Commentary: Canada

[PipDiddy]

And USD/CAD hits parity again! Fortunately, the Loonie's was short-lived, as traders bought up USD/CAD quickly after seeing it go under the 1.0000 handle. The pair ended the U.S. trading session at 1.0049, just 11 pips lower from its Asian session opening price.

Apparently, the better-than-expected results on the Canadian trade balance was enough to whet traders' appetite for the Loonie. The report showed that exports to the U.S. rose during September unexpectedly rose, which caused the country's trade deficit for August to shrink to 1.3 billion CAD from 2.7 billion CAD July. In addition, the figure was lower than the 2.3 billion CAD deficit initially predicted.

No major data coming out from Canada today, but still do watch out for its manufacturing sales report. It is expected to print a 0.5% rise in sales for September, opposite the 0.9% decline seen the month before. If the number comes out off-target, we may see the Loonie move... I wouldn't bet on any major moves though, as this report isn't heavily monitored by traders.

[PipDiddy]

The Loonie showed the market why it’s nicknamed after a flightless bird during Friday’s trading when it gave up 59 pips to the dollar. USD/CAD closed the week at 1.0105, ending the Loonie’s 6-week winning streak. Tsk, tsk.

Too bad for the com-doll, better-than-expected figures we saw weren’t enough to convince traders to show it some love. Statistics Canada reported that manufacturing sales for August grew by 2.0%, beating its 0.5% forecast and erasing the 1.1% decline it posted in July. There was also motor vehicle sales report for the same month which showed a softer decline at 4.8% than what the market was bracing for at 5.0%.

We’re in for a treat this week with a handful of high-caliber reports for the Loonie and we’ll kick start things tomorrow with the BOC’s interest rate announcement at 1:00 pm GMT. A lot of my buds in the FX hood are not keeping their hopes up for another hike given that consumer spending and employment have both declined since the last rate announcement.

Then on Wednesday the central bank will release its Monetary Policy report along with BOC Governor Mark Carney’s speech. For that, you may want to keep an ear out for hawkish mumbo-jumbo if you want to place your bets on the com-doll. We’ll then end week with the CPI reports for September and retail sales report for August on Friday.

Happy trading everyone!

[PipDiddy]

Too bad the Loonie’s pips during yesterday’s trading weren’t as sweet as Canada’s maple syrup. USD/CAD traded higher yesterday, peaking at 1.0228 before it closed the day at 1.0141, with the Loonie sustaining a 20-pip loss.

It looks like the Loonie won’t be getting any love from traders until after the BOC interest rate decision which is due later at 1:00 pm GMT. After three consecutive hikes, most of my buds here in the FX hood are expecting to hear the BOC holler a pause. Some are even bracing for dovish remarks from BOC Governor Mark Carney given that both employment and retail sales have been lower since the last rate announcement. Uh oh...

Make sure you don’t miss the rate decision and note that Carney is also giving a press conference along with the release of the Monetary Policy report at 2:30 pm GMT. May the pips be with ya!

[PipDiddy]

“Mayday, mayday, mayday…Position 178 pips north of yesterday’s open price… The Loonie is sinking.” The bulls were distressed over the Loonie’s dive in the pip charts yesterday as Canada was hit by a combo of dollar strength and Loonie weakness. USD/CAD soared to an intraday high of 1.0374 before leveling off to its 1.0319 closing price.

With the dovishness of yesterday’s economic reports, who could blame the currency bears for snacking on the Loonie? Not only did the Bank of Canada decide to keep its interest rates at 1.00% yesterday, it also lowered its 2010 growth forecast from 3.5% to 3.0%. Uh-oh, is the lack of growth in the US, Canada’s largest trading partner, weighing on the Canadian economy?

Maybe the BOC monetary policy report today at 2:30 pm GMT could tell us more about the BOC’s economic outlook.

The wholesale sales for August will also be released today at 12:30 pm GMT, and a figure higher than the expected 0.5% rise in sales could provide the Loonie some relief.

Keep your eyes glued to the tube yo!

[PipDiddy]

After losing for three straight days, the Loonie bulls decided that they had enough of just sitting back and letting the bears trample all over them. USD/CAD fell to 1.0222 by the end of the U.S. trading session, 130 pips lower from its Asian session opening price. Was the upmove we saw the past three days simply a retracement of the overall downtrend? Hah, that's what it seems like!

Apparently, risk appetite from positive corporate earnings and the overall sentiment that the Fed will engage in another round of quantitative easing were the primary culprits in USD/CAD's decline. Traders turned their "risk" on and started dumping the Greenback in favor of higher-yielding currencies like the Loonie.

Canada's wholesales report also helped. It revealed that sales grew 1.2% in August, more than double the 0.5% increase initially predicted and a huge improvement from the previous month's flat reading.

Not everything was rainbows and sunshine though. The BOC monetary policy report that was released yesterday showed that the bank has lowered its growth forecast for the upcoming quarters as currency tensions and global trade imbalance continue to get worse. It also provided no hint of another rate hike, which could cap the Loonie's rally.

For today, the data to keep an eye out for is Canada's leading index at 12:30 pm GMT. A 0.2% reading is expected for September, which is slightly lower than August's 0.5%. The leading index tries to predict the direction of Canada's economy, so falling figures mean that growth in the country is expected to slow down. If the actual comes out higher, we may see the Loonie climb higher against the Greenback again.

[PipDiddy]

“We’re going down, down, in an earlier round. And com-dolls we’re going down swingin’,” sang the Loonie as it joined its homies in the bear lair. It was able to drive USD/CAD to an intraday low of 1.0168 before it lost its ground to the dollar and ended the day with a 43-pip loss. Drats!

So what caused the Loonie’s boo-boo on the charts? Naysayers point to the worse-than-expected leading index for September which tumbled to -0.1% when the market had been expecting the composite index based on ten economic indicators to cite a 0.2% growth rate for the month.

This might have upset a few Loonie bulls as the decline (which is the first one since April 2009) confirms talks that the BOC won’t give another rate hike shoutout this year. Yikes!

If today’s economic reports disappoint the market, then we may just see the Loonie continue to chill with the bears for some time. At 12:00 pm GMT, we’ll have the official inflation report for September. The headline CPI figure is anticipated to come in at 0.1% while the Core CPI is seen at 0.3%. Then at 1:30 pm GMT, analysts are expecting to see that retail sales declined by 0.1% in August.

May the pips be with y’all! Peace out!

[PipDiddy]

The Loonie was wrestling for pips against the dollar last Friday with USD/CAD falling to an intraday low of 1.0224 right after tapping a high of 1.0303. Too bad for the com-doll, it didn’t have enough swagger left to end the day with a win as USD/CAD closed 6 pips higher at 1.0270. Drats!

Better-than-expected consumer spending and inflation reports might have helped the Loonie hustle against the dollar. Statistics Canada reported that CPI was at 0.2% in September which was 0.1% higher than what the market was anticipating. On the other hand, the core rate which excludes volatile items only printed at 0.2% and fell short of the 0.3% forecast.

Retail sales also came in as a pleasant surprise at 0.5% for August which beat the 0.1% decline that analysts were bracing for.

Some of our buds here in the FX hood say that the currency’s loss might have been because the BOC's pessimism on the country's economic outlook. Uh oh…

Our awesome economic calendar shows that we’re in for a snoozefest for the Loonie until Friday when the GDP report for August is released. Analysts are expecting to see that the economy expanded by 0.3% during the said month, erasing the 0.1% decline it posted in August.

And so, it may be wise to get a feel of the market’s sentiment in trading the Loonie as the lack of economic reports may leave currency vulnerable to market’s mood swings. Good luck y’all!

[PipDiddy]

Score another one for the comdoll connection! Like the other commodity-related currencies, the Loonie gained against the dollar after the dollar-bearish sentiments from the G20 meeting and Goldman Sachs estimates. USD/CAD dropped to an intraday low of 1.0155 before leveling off 53 pips lower than its open price at 1.0203.

The boards were empty yesterday, but Bank of Canada Governor Mark Carney will make things interesting at 7:30 pm GMT when he gives his speech before the Standing Committee on Finance in Ottawa.

Don’t even think of missing all the action!

[PipDiddy]

The Loonie practically erased its gains against the Greenback from Monday as the American currency beefed up and pushed USD/CAD higher yesterday. The Loonie hardly put up a fight! The lack of reports from Canada allowed USD/CAD to finish at 1.0240, up 36 pips for the day.

Unfortunately, the Loonie couldn’t find support from commodities either. Moves in the commodities markets remained weak yesterday and couldn’t give bulls what they needed.

Uncertainty surrounding the U.S. FOMC statement next week seems to be taking its toll on the Loonie as well. Remember, the U.S. is Canada’s largest trading partner. Since the two are practically joined at the hip, what affects the U.S. usually has a great impact on Canada, too.

In other news, BOC Governor Mark Carney took center stage and spoke before the Finance Committee of the House of Commons. He sounded particularly concerned about Canada’s labor productivity, saying that it is woefully low. He also said that even though the economy has been faring better than most advanced countries, he’s expecting business investment to take over and fuel economic growth as consumer spending is expected to weaken in the coming years.

Today, we’ll hear more about what Carney has to say about the economy when he speaks at 8:15 pm GMT. This guy just loves the spotlight, doesn’t he?! Maybe he’ll give us something new to chew on and drop hints about future policy moves. Stay glued to the tube, brah!

[PipDiddy]

Yeouch! The Loonie lost against its major counterparts yesterday despite the absence of economic reports in Canada. USD/CAD rose to an intraday high of 1.0340 before leveling off 47 pips higher than its open price at 1.0288. Meanwhile, CAD/JPY plunged to an intraday low of 78.94 before ending the day at 79.42.

Is it because investors agree with Bank of Canada Governor Mark Carney? In his speech before the Senate Committee on Banking, Trade and Commerce, Carney relayed his concerns over the economy’s exports. Apparently, weak demand from the U.S., its largest trading partner, and a strong Loonie are making exporters skittish over the Canadian economy. Uh-oh.

The boards are still empty in Canada today, but keep your eyes peeled for any reports that might influence comdoll trading!