Daily Economic Commentary: Canada

[PipDiddy]

Hang in there, Loonie! USD/CAD managed to keep its head below the 1.0000 handle yesterday after spiking to a high of .9988. At the end of the day, the Loonie was able to outpace the Greenback with USD/CAD closing at .9930. Will the Canadian currency be able to hold on to its gains?

Stronger than expected Canadian building permits allowed the Loonie to stay afloat yesterday as the report showed a 4.7% jump for March. This was much better than the estimated 0.5% decline, but was weaker than February's 7.6% increase. Still, the report chalked up its second monthly climb, which spells bright prospects for Canada's housing industry.

Canada is set to release another housing industry report today. The housing starts figure for the month of March is due 12:15 pm GMT and is expected to come in at 204K, which would reflect a slight pullback from February's 216K figure. Keep an eye out for the actual release because another strong figure could give the Loonie a boost.

[PipDiddy]

Score another one for the bears! They were in complete control of the Canadian dollar yesterday as they rode the tides of risk aversion and carried USD/CAD higher. As a matter of fact, the pair didn't move much below its opening price and began its rally early in the day to end 54 pips higher at .9984.

Though housing starts data came in above expectations, it didn't give Canadian dollar bulls the boost they needed to overcome the selling pressure rooting from risk aversion. Housing starts grew from 215,000 to 245,000 last month, beating forecasts which called for an annualized figure of 204,000.

So far, momentum seems to be carrying USD/CAD higher as the pair is already testing parity. But will this major psychological handle hold? Only time will tell! Since we don't have any Canadian reports on the economic calendar today, USD/CAD price action will probably depend heavily on risk sentiment. That being said, be sure to monitor developments in the euro zone, as traders seem to be focused on the possibility of a "Grexit" (Greek exit) at the moment.

[PipDiddy]

The Loonie joined its comdoll comrades in the losers' bench yesterday as risk aversion continued to dictate market sentiment. USD/CAD rallied to its 4-week high at 1.0063 before closing the day 27 pips above its opening price at 1.0010.

Some market junkies say that the lack of economic reports from Canada left the Loonie vulnerable to concerns about the euro zone. But don't worry! Today we have a couple of reports to sink our teeth into. If they come in better than expected, we MIGHT just see USD/CAD trade below parity once again!

Watch out for the trade balance and house price index reports for March at 12:30 pm GMT. A modest trade surplus of 700 million CAD is expected for the month. Meanwhile, house prices are seen to have grown by 0.2%.

Be sure you ain't snoozing when the reports are released later, ayt?

[PipDiddy]

Parity is sure being stubborn, huh? USD/CAD just couldn't seem to break below the 1.0000 major psychological level yesterday since risk appetite wasn't strong enough to boost the Loonie. Could the Canadian jobs data act as a catalyst for a USD/CAD breakdown?

Just when it seemed like USD/CAD was going to breach parity, Canada printed weaker than expected trade balance data and triggered a bounce. Their trade surplus came in at 0.4 billion CAD, slightly higher than the previous month's 0.3 billion CAD reading, but smaller than the estimated 0.7 billion CAD surplus. Luckily for the Loonie, the U.S. also printed a poor trade balance, which helped keep USD/CAD below the 1.0030 resistance Happy Pip pointed out in her recent trade.

Canada's jobs report due 12:30 pm GMT today just might be the catalyst that could push USD/CAD for a breakout either way. The report is expected to show a 10.1K increase in net hiring for April, which could bring the unemployment rate up from 7.2% to 7.3% during the month. If the actual data comes in as expected, it would be a bit worse off compared to March's 82.3K jump in employment, which could still be bearish for the Loonie. But if the actual figures beat expectations, we might just see USD/CAD make a convincing break below parity!

[PipDiddy]

Where do you think you're going, Loonie? Definitely not above 1.0050! Once again, USD/CAD found resistance at 1.0050 too tough to handle and ended up closing just above parity. Will the long-term resistance level continue to hold up this week?

One reason why the Canadian dollar was resilient last Friday was due to the waxing hot Canadian employment data. 58,200 jobs were added to the economy last month, which was nearly six times the anticipated 10,000 increase. Meanwhile, the unemployment rate clocked in at 7.3%, which was expected.

No data coming out from the Great White North over the next couple of days, so we can expect risk sentiment to be the major driver of Loonie trading. Keep an eye out for any news out of the euro zone – you never know what might send the markets into a frenzy!

[PipDiddy]

The Loonie started the week on a sour note yesterday as it was unable to hold its ground against the safe haven Greenback. The Loonie was sold-off throughout the day and ended the U.S. trading session with a 36-pip loss at 1.0029.

Market sentiment continued to be at a low point yesterday as investors and traders failed to see signs of relief in the Greek political drama. Political parties remain in disarray, which is hurting the country’s chance of receiving its next round of bailout funds.

No major news report scheduled for release in Canada today so the Loonie’s price action will depend a lot on how the market is feeling. If we don’t see any change in sentiment, or economic data in the euro zone and the U.S. continue to disappoint, the Loonie will probably sell-off again. Let’s see how today’s price action unfolds!

[PipDiddy]

With the lack of releases from Canada, USD/CAD trading took its cues from the Greenback and unfortunately for the Loonie, this meant another day of losses. After opening at 1.0029, USD/CAD trickled higher and finished at 1.0068, marking a 29-pip gain.

Today, we FINALLY have something coming out from Canada, as manufacturing sales figures are due at 12:30 pm GMT. Expectations are that sales grew by 0.4%, which would be a nice change-of-pace from the previous month’s -0.3% decline. If this comes in better-than-expected, it could give the Canadian dollar a nice boost up the charts.

[PipDiddy]

The Loonie's performance on the charts was still pretty lousy in yesterday. It pared the losses it scored during the Tokyo session and USD/CAD dropped from its 5-week high of 1.0131 to 1.0068. However, the Loonie quickly gave back up the upperhand to the dollar and closed the day with a 59-pip loss at 1.0127.

The lack of economic reports from Canada might've once again left the currency vulnerable to risk aversion. But don't worry Loonie bulls! Perhaps the wholesale sales report, due at 12:30 pm GMT, could boost the comdoll. If you're looking to go long on the currency, keep your fingers crossed for the actual figure to come in better than the 0.4% forecast. Good luck!

[PipDiddy]

Make that four in a row! With risk aversion reigning supreme, USD/CAD continued to shoot up higher, as it posted its 4^th consecutive green candle, with the pair closing 63 pips higher at 1.0190. Will we see the pair go for a clean sweep or will Loonie bulls have something to say about that?

Yikes! It looks like foreigners aren’t digging Canadian financial securities as much as they used to! Net foreign securities purchased posted a deficit of 2.08 billion CAD in March, which was way off the expected figure of 9.34 billion. This means that’s Canadians bought more foreign financial securities than foreigners bought Canadian assets.

Meanwhile, wholesale sales growth came in as expected, printing at 0.4%. Still, this was much lower than the 1.5% we saw the previous month.

Looking at our economic calendar, we could be in more for more action on the Loonie as Canadian CPI data will be released at 12:30 pm GMT. Headline and core inflation are expected to clock in at 0.3% and 0.2%, respectively. Both these figures would be lower than last month’s printing of 0.4% and 0.3%. If it appears that inflation remains subdued, it could give the Bank of Canada room to cut rates sometime down the road, which would be bearish for the Loonie.

[PipDiddy]

Oh, Loonie. Sometimes, even positive data just ain't enough! With markets still neck-deep in risk aversion, the Loonie scored another loss to the dollar. USD/CAD ended Friday's trading 21 pips higher at 1.0210.

It was reported that inflation pressures rose in Canada in April. The headline CPI figure topped expectations when it printed at 0.4% while the forecast was only at 0.3%. Meanwhile, the core reading which excludes volatile items, printed twice the forecast at 0.4%.

Concerns about a Grexit and a contagion in Europe continued to dominate sentiment. So with our forex calendar blank for reports from Canada today, we could see the Loonie fall victim to risk aversion once more if the negative sentiment continues.