Daily Economic Commentary: Canada

[PipDiddy]

Back-to-back win, baby! With no major data released from Canada and the U.S., the Loonie traders traded on expectations for the week ahead. USD/CAD fell by another 10 pips yesterday as it finished at .9908. What’s in store for the oil-related comdoll today?

Only the quarterly corporate profits report at 12:30 pm GMT is scheduled for release in the land that’s famous for maple syrup. That means that we have more room for QE3 or even ECB bond-buying speculations!

Be careful though, as market players are pretty evenly divided on whether or not the Fed will actually announce its QE3 plans later this week. For the newbies out there, you should know that high-yielding currencies like the Canadian dollar usually go up against the Greenback whenever the Fed announces its plans to actively stimulate the economy.

Go grab those pips, kids!

[PipDiddy]

The Loonie continued to get more lovin' in yesterday's trading. Before closing the day with a 30-pip win against the dollar at .9878, it was able to tap an intraday high of .9842.

Aside from the slight pick-up in risk appetite, it also helped that oil prices continued to trade higher. If Forex Gump is right and crude oil continues to rise, we could see the Loonie extend its gains. Remember that the currency shares a positive correlation with the commodity because oil is Canada's biggest export.

With that said and given that there are no major reports on tap for the Loonie today, be sure you keep tabs on the commodity markets! Good luck!

[PipDiddy]

Due to the contrasting results between U.S. and Canadian economic data, the Loonie was unable to hold its ground versus the haven Greenback. USD/CAD, which had started the day at .9878, was sitting at .9894 by the end of the U.S. trading session.

The Raw Materials Price Index (RMPI) from Canada only showed a 0.9% increase, notably worse than the 2.1% gain forecast. On the other hand, the U.S. the Preliminary GDP confirmed that the country indeed grew 1.7% during the second quarter while the Pending Home Sales beat forecast by more than twice the expected amount.

Today, the only report coming out of Canada is its current account balance. It’s predicted to show a 15.2 billion CAD deficit, 48% higher than the deficit seen the previous month. A rising deficit is normally seen as bearish for the currency as it could mean that foreign demand for the Loonie-denominated assets is falling.

[PipDiddy]

Is the Loonie losing its luster? The comdoll extended its losses against the dollar yesterday as risk aversion kicked in. USD/CAD traded higher after opening at .9894. By the New York session close, the pair was up at .9924.

Aside from market sentiment turning sour, it also did not help the Loonie that Canada's current account for Q2 2012 printed a 16 billion CAD deficit. Analysts had only braced for a 15.2 billion discrepancy.

But fret not, Loonie bulls! Who knows, the monthly Canadian GDP report may just give the Loonie its much-needed boost. Due to be released at 12:30 pm GMT today, the market is eyeing the economy to have grown by 0.1% in June.

Forex Gump wrote an article on how the report could affect the currency, so make sure you give it a read if you decide to trade the news. Good luck!

[PipDiddy]

The Loonie flexed its muscles at the end of the week versus the safe haven Greenback amid the signs of another round of stimulus measures by the Federal Reserve in the near future. USD/CAD closed out Friday at .9858, 65 pips lower from its opening price that day.

The Loonie also received a huge boost from the better-than-expected Canadian GDP. It showed that Canada’s economy expanded by 0.2% in July, which was twice the expected amount.

No data coming out of Canada today, the rest of the week is filled with high profile reports.

On Wednesday, the Bank of Canada (BOC) will announce its decision on interest rates. The market widely expects the central bank to keep rates unchanged at 1.00%. This means that any deviation from market forecast will have a big effect on the Loonie’s price action. A surprise rate cut could result in a sell-off in the Loonie while a rate hike could lead to a strong rally.

On Friday, the building permits report, employment data, and the Ivey PMI will be published. Individually, these reports are already market-movers, so expect a lot of volatility once they are released on Friday.

[PipDiddy]

With Canada enjoying a Labor Day holiday, USD/CAD’s price action was limited to a 30-pip range. The tug-o-pip eventually ended with the pair closing 19 pips lower than its open price. What’s in store for the Loonie today?

There are no economic reports scheduled from Canada today, so the Loonie bulls and bears will have to turn to the other major economies for market-moving reports. Take note of a possible return of volume and volatility in the charts as traders come back from their summer vacations.

The RBA is also set to announce its interest rate decision today, so hang tight in case the comdoll traders decide to buy or sell the Loonie too!

[PipDiddy]

Looks like someone's not ready to end his vacation! USD/CAD was still a dead market yesterday even though Canadian and U.S. bankers had returned from a three-day weekend. After a bit of sideways action that saw the pair trade within a 25-pip range, USD/CAD settled at .9858, just 1 pip below its opening price.

I know what you're thinking... What a bore, right? But without any major reports on the calendar from Canada, the Loonie's inactivity shouldn't have been too much of a surprise.

Plus, you have to remember that the BOC is set to hold its rate decision later today (1:00 pm GMT), so traders might have been apprehensive about committing to new Loonie positions right before the big event.

So what should we expect from the central bank later on?

Well, for one, you can expect it to keep interest rates unchanged at 1.00%. Also, most believe the BOC will maintain its hawkish stance, but there is a chance that BOC head Mark Carney will change his tone. After all, Canada's recent reports haven't been all too good as of late. Still, the markets are expecting Carney to repeat his talk of withdrawing stimulus, so if his statement later on turns out weak, it could finally lead to a correction on USD/CAD.

To find out more about and to learn how to trade this upcoming event, I suggest you check out Forex Gump's BOC rate decision trading guide.

[PipDiddy]

Ouch! After lollygagging at the .9850 level, USD/CAD powered higher and capped the day 51 pips above its open price. Did the BOC’s interest rate decision have anything to do with the price action?

Not really. In fact, the Loonie even strengthened minutes after the BOC printed its decision. Market players were surprised that the central bank stuck to its hawkish tone, saying that gradual removal of stimulus might still be needed in the future.

Unfortunately for the comdoll bulls, investors quickly took profit as they wait for the ECB to take its spot in the forex scene. No report will be released from Canada today, so you might want to focus on what the ECB has to say.

Word on the hood is that a rate cut is expected, along with some sort of bond-buying program. Comdolls like the Loonie could take hits if the ECB disappoints, so make sure you watch your trades closely!

[PipDiddy]

What a rally by the Loonie! The Canadian currency took advantage of the improvement in risk sentiment yesterday, allowing USD/CAD to dip to a low of .9809 before closing at .9828. Will it be able to hold on to its gains this NFP Friday?

Although Canada didn't release any data yesterday, the Loonie didn't get left behind on the risk rally which stemmed from the ECB's decision to implement more bond purchases.

While most of the Loonie's gains could be attributed to risk sentiment, today is a different story. The Loonie has a lot on its plate as Canada is set to release it jobs data and its Ivey PMI. After dipping by 30.4K in July, Canada's employment change figure is expected to show a 9.9K rebound in hiring for August. This should be enough to keep their jobless rate steady at 7.3% for the month. Keep an eye out for the actual release at 1:30 pm GMT because another disappointing figure might force the Loonie to return its recent gains.

Meanwhile, their Ivey PMI is expected to drop from 62.8 to 61.2 in the same month, suggesting that the expansion in the manufacturing industry slowed down in August. If you're trading the Loonie, note that the actual release of the Ivey PMI is at 3:00 pm GMT and that a weaker than expected reading might be negative for the Canadian currency.

Don't forget that today is also NFP Friday, which means that we should brace ourselves for a lot of action during today's U.S. session. Do drop by my U.S. economic commentary and check out Forex Gump's NFP predictions if you're brave enough to play this release!

[PipDiddy]

Chalk up another one for the Loonie! Thanks to contrasting jobs figures reports, the Canadian dollar drilled the greenback, as USD/CAD sank 45 pips lower to finish at .9783.

An additional 34,300 jobs were added to the Canadian economy last month, which was more than three times greater than the projected 9,900 increase. Meanwhile, the unemployment rate remained steady at 7.3%.

Combining this with the news that Uncle Sam posted jobs gains of just 96,000 – way below the 123,000 forecast – it’s no surprise that the Canadian dollar ruled the day!

Meanwhile, the Ivey PMI came in at 62.5, a slight decrease from the previous month’s 62.8, but still above the anticipated reading of 61.2.

The Canadian dollar’s rally could have even been more impressive had it not been for the dismal building permits report, which indicated that permits granted dropped by 2.3%. It was projected that permits would decrease by just 1.5%.

Nothing on tap today, but you’d best be served keeping a close eye on risk sentiment, as this will most likely be the major driving theme in the markets over the next couple of days.