Daily Economic Commentary: Canada

[PipDiddy]

The Loonie finally hit the brakes yesterday to end the dollar's winning streak at three. USD/CAD closed the day 7 pips below its opening price at 1.0396. Will it extend its gains in today's trading?

That would probably depend on the BOC. If Forex Gump is right, we'll probably see the Loonie give up more pips to the dollar when the statement is announced at 1:00 pm GMT. According to his Piponomics article, the central bank was pretty hawkish in its previous meeting but the degree of aggressiveness might be toned down this time around because recent data from Canada showed signs of weakness.

But that's just my two cents. Who knows, a not-so-hawkish BOC statement may already be priced in and we could see the Loonie rally.

Also be sure to keep tabs on the building permits report due at 12:30 pm GMT. The number of permits issued for May is seen to show a 0.3% contraction. A better-than-expected figure may also help the Loonie rally, so be sure you don't miss it!

[PipDiddy]

Yesterday marked the Loonie's second straight victory against the Greenback as demand for the Canadian currency kept USD/CAD from rising above the 1.0400 resistance zone. With help from the BOC rate decision, sellers were able to push the pair another 17 pips down to 1.0379.

Though the BOC's decision to keep rates unchanged at 1.00% came as no surprise, the fact that it expressed its openness to remove stimulus caught markets a bit off guard! Many thought the BOC would tone down its hawkishness in light of recent signs of weakness in Canada. After all, oil prices have been declining, Canadian equities have been tanking, and exports have been suffering as well.

To be fair, Canadian policymakers did acknowledge these threats and several others, such as the European crisis and weak inflation. But according to them, the economy's spare capacity gives them room to withdraw stimulus.

In other news, the building permits report for April came in as a huge disappointment, showing a 5.2% decline instead of a decrease of just 0.3%. Apparently, the big drop was a result of "lower construction intentions" in Ontario.

No more reports to follow in Canada today. In the meantime, keep track of risk sentiment. Remember, risk aversion is the Loonie's enemy! Good luck and happy pipping, fellas!

[PipDiddy]

With risk appetite making a nice comeback, comdolls like the Canadian dollar made a sweet rally up the charts yesterday. USD/CAD broke through key support to finish 100 pips lower at 1.0279.

For today, we’ve got the Ivey PMI headed our way at 2:00 pm GMT. Word on the street is that the index will print at 53.5, marking a decent improvement from the last month’s reading of 52.7. If the report comes in better-than-expected, it could give the Canadian dollar another boost up the charts.

That said, keep in mind that the Loonie is susceptible to the whims of risk sentiment. Yesterday’s price action is proof of that! Make sure you keep an eye out for developments else, especially in the euro zone!

[PipDiddy]

Is that a doji on USD/CAD’s daily chart I see? Why, yes it is! The shifting market sentiment caused USD/CAD to move all over the place yesterday! At first, USD/CAD fell, as China announced that it would be cutting rates by 25 basis points. Then, once the U.S. trading session rolled along, the pair surged higher, as Federal Reserve Chairman Ben Bernanke did not affirm QE3. USD/CAD ended the day at 1.0278, just one pip lower from its Asian session opening price.

In other news, the Ivey purchasing managers’ index exceeded market forecast. It came in at with a reading of 60.5, significantly higher than the 53.5 initially predicted.

Today will be a big day for the Loonie as Canada is going to release its employment report at 12:30 pm GMT. The market expects it to show that 10,000 people (net) were added to the workforce and that the unemployment rate remained at 7.3%.

The trade balance and the housing starts report will also be published at the same time. The trade balance is slated to show a 49.4 billion CAD deficit, which is slightly lower than the previous month’s 51.8 billion CAD deficit. Meanwhile, the housing starts report is anticipated to print 226,000.

[PipDiddy]

What a crazy end to the week for the Loonie! After It looked like it was heading for new highs, USD/CAD came tumbling down late in Friday’s New York session and eventually closed at 1.0270, 8 pips below its opening price.

The Loonie was able to buckle poor economic data last Friday, as everything basically printed in the red.

Employment data disappointed, as only 7,700 jobs were added to the economy over the past month, while the unemployment rate remained steady at 7.3%. Not only was this less than the projected 10,000 increase, but it was also way off from 58,200 jobs added that we saw last month. Could the Great White North be following Uncle Sam’s lead in terms of deteriorating labor market conditions?

In other news, housing starts and trade balance figures were also dismal. Housing starts printed an annualized pace of 211,000, which was slower than the 226,000 expectation. Meanwhile, Canada posted a trade deficit of 400 million CAD, worse than the anticipated surplus of 200 million CAD for April.

These data could give the Bank of Canada more reason to take a more aggressive stance towards monetary policy. Considering that other central banks have appeared to lean towards more easing measures, more weakness in the Canadian economy could prompt our homies over at the BOC to follow suit.

No biggies on tap over the next couple of days, but make sure you keep an eye out for risk sentiment. As I always say, you never know what might happen, and sentiment can always change on a dime, so stay on your toes!

[PipDiddy]

USD/CAD's weekend gap just got filled! Now what? Risk aversion weighed on the higher-yielding Canadian dollar and oil prices yesterday, but will this market behavior carry on? Take a look at what's in store for the Loonie today.

Canada didn't release any economic figures yesterday, which was probably why the Loonie was so sensitive to risk sentiment. It turns out the markets weren't too happy about the news of a Spanish bailout as they worried that history would repeat itself, eventually resulting in more speculation that countries would be exiting the euro zone.

There are no reports on Canada's schedule for today, which means that the Loonie could still be at the mercy of risk sentiment for today's trading sessions. Make sure you keep close tabs on any updates from the euro zone, particularly from Spain, to figure out whether we'd see another safe-haven rally or not. Good luck!

[PipDiddy]

Not so fast, Greenback! Thanks to unwinding of short positions and bullish news for oil, the Loonie was able to pare some of its intraweek losses against the Greenback. USD/CAD fell by 47 pips to 1.0257 after hitting an intraday high of 1.0326. What’s in store for the Loonie this week?

The economic board is light in Canada today as there won’t be any reports released (again). This means that you gotta pay extra attention on risk sentiment as well as oil price action! If you remember, Canada is one of the world’s largest oil producers, so oil price movements tend to affect the Loonie. And with the OPEC meetings only less than a day away, you can bet your neighbor's cat that there's going to be volatility!

Good luck trading today, kids!

[PipDiddy]

Without any economic data from Canada, it seemed that the Loonie got bullied in yesterday's trading. USD/CAD closed the day higher in yesterday's trading at 1.0292, up 26 pips from its opening price of 1.0266.

Disappointing reports from the U.S. as well as elevated concerns about the euro zone might have dampened market sentiment and kept the higher-yielding Loonie from rallying.

With that said and given that only a couple of low tier reports are scheduled from Canada today, I won't be surprised to see the Loonie falls victim to market sentiment again.

At 12:30 pm GMT, the NHPI for April will be released and it is anticipated to show that the selling price of new homes grew by 0.4%. The capacity utilization rate will also be on tap, eyed to come in at 80.9%.

Better-than-expected figures could provide the Loonie with support on the charts and so can risk appetite. So make sure you keep an ear out for news reports that could give investors more reason to seek higher-yielding assets!

[PipDiddy]

Risk appetite seemed to pick up slightly yesterday, allowing the Loonie to erase its recent losses and jump ahead of the dollar. By the end of the day, USD/CAD was trading at 1.0237, down 55 pips from its opening price.

It seems that even with bond yields soaring to new highs, risk aversion didn’t sweep through the markets and sink higher-yielding currencies yesterday. I think traders are still being cautious and are waiting for the weekend to pass as the Greek election comes to an end.

For today, we’ve got second tier data on tap in the form of manufacturing sales figures at 12:30 pm GMT. Word on the street is that sales picked up by 0.5% last month, which would be a decent follow-up to the 1.9% rise we saw the previous month.

To be honest though, I’m not sure we’ll see too much movement in today’s trading, but nevertheless, make sure to stay on your toes as you never know what might drive the markets!

[PipDiddy]

Despite weaker than expected economic data from Canada, the Loonie was able to chalk up another day of gains against the Greenback on Friday and USD/CAD even gapped lower over the weekend. Will the Canadian dollar be able to hold on to its recent gains?

Last Friday, Canada released its April manufacturing sales report which printed a 0.8% decline. This was significantly weaker than the projected 0.5% uptick and the previous month's 1.5% increase, reflecting a downturn in Canadian manufacturing activity.

However, talks of QE3 from the Fed dampened demand for the U.S. dollar, which enabled the Loonie to end Friday on a positive note.

Today, only the foreign securities report is due from Canada and it is expected to show a rebound from -2.08 billion CAD in March to 3.41 billion CAD in April. A higher than expected figure would reflect stronger demand for Canadian assets, which would be good for the Loonie. Make sure you keep an eye out for the actual release at 12:30 pm GMT.

Later on, Canada will release its wholesale sales figure on Tuesday and its retail sales data on Thursday while Friday has Canada's CPI reports on tap. Don't forget to do your research and stay tuned to my daily commentaries if you plan to trade these releases!