Daily Economic Commentary: Canada

[PipDiddy]

The Loonie may have slammed on the brakes after its strong rally last Friday but the Canadian currency still managed to outpace the Greenback by a small margin during yesterday's trading. USD/CAD closed at .9775, 5 pips below its .9780 open price.

Even though most major currencies got hit by profit taking yesterday, the Loonie was able to hold its ground as it still ended up higher against the lower-yielding Greenback. Canada didn't release any top-tier reports yesterday but positive interest rate expectations from the BOC, combined with speculations of QE3 from the Fed, provided downward pressure on USD/CAD.

Only the trade balance is set for release from Canada today and their deficit is expected to have narrowed from 1.8 billion CAD to 1.4 billion CAD in July. A smaller than expected deficit could mean that Canada's export industry is starting to gain momentum, which would be positive for the Canadian economy and the Loonie. Keep an eye out for the actual release at 12:30 pm GMT.

[PipDiddy]

Once again, the Loonie outperformed the Greenback! With Moody’s threatening to downgrade U.S. debt, USD/CAD slipped another 44 pips as it fell to .9731 and recorded its fourth straight slide. When will USD/CAD's downtrend end?

The Loonie had no trouble rising up the charts yesterday, even though Canada published a not-so-upbeat trade balance report. Canada's trade deficit expanded from 1.9 to 2.3 billion CAD in July, instead of shrinking to 1.4 billion CAD. As it turns out, merchandise exports fell 3.4% that month, led by a huge drop in energy exports. Energy exports experienced dropped 8.5% as both the volume of exports and oil prices slid in July. Still, the markets didn't seem to be too bothered by these figures, as they kept buying up the Loonie anyway!

No reports from Canada today, but there's a good chance the markets will be dancing to the tune of risk sentiment. With the euro zone set to hold three major events today and the FOMC statement just a day away, things could get messy. Don't forget to practice smart risk management if you plan to trade today!

[PipDiddy]

Poor Loonie! Among the commodity currencies, it was the only one that scored a loss to the dollar in yesterday's trading. USD/CAD rallied after it hit an intraday low at .9715, closing the day 34 pips above its opening price at .9766.

There wasn't any piece of economic report released from Canada and oil prices remained steady. So what caused the Loonie's loss?

Nothing.

Market analysts say that the currency's price action yesterday was nothing more than a correction or a pullback. After all, the Loonie has been on a strong run lately. So with our forex calendar still blank for market-moving reports for the Loonie, keep that in mind when you trade today. Peace out!

[PipDiddy]

And just like that, USD/CAD makes a new yearly low! The pair broke down from consolidation after the Fed announcement yesterday and dipped below the .9700 major psychological level. What the heck happened?

The Fed finally announced another round of quantitative easing during the FOMC statement yesterday, but this time their program was kept open ended. The U.S. central bank said that they would buy $40 billion worth of mortgage-backed securities each month, but did not state until when. By the looks of it, Bernanke and his men must be really worried about the U.S. economy's performance and are willing to do everything in their power to boost the economy.

There were no major releases from Canada then, but the Loonie sure took advantage of the sharp U.S. dollar selloff that took place!

Up ahead, Canada is set to print its manufacturing sales data for July. After dipping by 0.4% in June, a 0.4% rebound is expected for the following month. But if the actual figure misses the mark, the Loonie might be forced to return its recent gains. Be careful of potential profit taking today, too!

[PipDiddy]

This is why you don’t count your chickens before they hatch! The Canadian dollar looked like it was gonna continue dominate the dollar, as USD/CAD set a new low at .9633 last Friday. However, the Canadian dollar lost all momentum, as the dollar came roaring back during the New York session. By the end of the day, USD/CAD closed at .9706, up 23 pips from its opening price.

One reason why the Canadian dollar may have lost a step was due to worse-than-expected manufacturing sales figures. A report released last Friday indicated that sales dropped by 1.5% last July, after it was expected to increase by 0.4%. Furthermore, June’s sales were revised lower to reflect a decrease of 0.8%, after initial reports printed flat growth.

With these new figures, manufacturing sales have now dropped three consecutive months! So much for the summer boom!

For today, all we’ve got lined up is foreign securities purchases figures at 12:30 pm GMT. This report measures the net amount of Canadian financial assets purchased by foreigners. Early forecasts are saying that 11.3 billion CAD worth of assets were bought last July, which would be a nice turnaround from the -7.89 billion CAD we saw the month before. This would indicate that demand for Canadian assets has picked up, which should bode well for the Canadian dollar.

[PipDiddy]

Ah, do you taste that? It’s the sweet taste of victory! For the second straight day, the Loonie bears were able to pummel the bulls to the ground. From its opening price at .9706, the bears took USD/CAD higher to .9748.

The Foreign Securities Purchases report was the only economic data published yesterday. It showed a 6.67 billion CAD figure (the total value of stocks, bonds, and other money-market assets purchased by foreigners), significantly lower than the 11.30 billion CAD the market had initially expected.

Canada’s economic cupboard is completely empty today. This means market sentiment will be key in determining where the Loonie will be headed today.

[PipDiddy]

“Chillin’ like a villain, baby!” That was the motto for USD/CAD yesterday, as it stuck within a tight range of just 30 pips. Will the consolidation continue or is a breakout on the horizon?

Unfortunately for all you breakout fans, we’ve got nothing lined up from Canada today. Nevertheless, make sure you hit up my U.S. commentary, as we’ve got potential FX market catalysts from the US housing data on tap. If those reports come in far from forecast, we could see the loonie move as well during the New York session.

[PipDiddy]

Without any economic data from Canada, the Loonie just continued to range like a Range Rover against the dollar. USD/CAD traded sideways all throughout yesterday's trading before ending the day 3 pips below its opening price.

Our forex calendar is still blank for reports for the Loonie today. However, we do have a few top-tier data from the U.S. and euro zone that could affect market sentiment and move the comdoll. Just keep in mind that the Loonie usually rallies when risk appetite is up, okay? Good luck!

[PipDiddy]

Like the Aussie, its comdoll buddy, the Loonie fell victim to risk aversion in the markets yesterday. USD/CAD rocketed to an intraday high of .9817 before it levelled off to close only 21 pips higher than its open price. What gives?

As I mentioned in my AUD piece, China’s manufacturing data released yesterday didn’t do the comdolls any favors. It showed another contraction, which signals potential lack of commodity demand from the world’s second largest economy. Of course, it might have helped that oil prices finally put a plug on its slipping prices.

Canada is set to release its CPI reports today at 12:30 pm GMT. The headline figure is expected to come in at 0.4% in July while the core figure is seen at 0.3%. Both figures were at 0.1% in June. Meanwhile, the wholesales data also scheduled to come out at the same time is expected to print a 0.1% contraction for June.

[PipDiddy]

There was no partyin' for the Loonie on Friday. It ended the week with a 3-pip loss for the day as USD/CAD closed higher at .9767 from .9764.

Worse-than-expected inflation data from Canada might have weighed down the currency. Excluding volatile items, the core CPI reading for August came in just as expected at 0.3%. However, the headline figure came in lower than expectations at 0.2% versus the 0.4% forecast.

The report may not sound that disappointing. However, some market junkies argue that it could give the BOC one more reason to shed its hawkish feathers for dovish ones. (Remember that the BOC talked about increasing rates earlier this month.)

If you wanna get a deeper insight in the central bank's future monetary policy decisions, you should tune in to BOC Governor Mark Carney's speech later at 8:00 pm GMT. Hints about a shift in the BOC's hawkish stance to a dovish one may send the Loonie trading lower agains the dollar so be on your toes!