Daily Economic Commentary: Canada

[PipDiddy]

The Loonie traded in a perfect “U” pattern yesterday as it had fallen early in the day but recovered all of its losses before it closed for the day. USD/CAD opened and closed the day at .9766.

No major economic data was released yesterday but oil prices were slightly softer. Oil went down $1.10/barrel during the day to close the U.S. trading session at 91.95/barrel.

Today, the only major economic data from Canada is the retail sales report at 12:30 pm GMT. The headline figure is expected to be at 0.2% while the core version that excludes volatile items is predicted to come in at 0.3%. Last month, both the headline and the core version showed a 0.4% decline.

Let’s see if the positive expectations will be able to help the Loonie recover its losses from the last couple of days.

[PipDiddy]

Check out the .9800 area holdin' like a boss for USD/CAD! Thanks to better than expected Canadian retail sales data, USD/CAD kept its head below that major psychological level and closed at its day open price. Will .9800 still hold today?

Even though risk was off during yesterday's trading, the Loonie managed to hold its ground against the U.S. dollar after Canada printed strong retail sales data for July. Headline retail sales rose by 0.7% while core retail sales increased by 0.7% during the month, and this rebound was more than enough to erase the declines seen last June.

There are no economic reports due from Canada today so make sure you watch risk sentiment carefully to figure out where the Loonie could be headed. If risk stays off, there could be a chance we'd see USD/CAD break above .9800!

[PipDiddy]

Ooh, that burns! The Loonie got another beating from the Greenback yesterday, allowing USD/CAD to make a clean break above the .9800 major psychological resistance. The pair closed at .9852 after reaching a high of .9861.

There were no reports released from Canada yesterday but weaker than expected data from its North American neighbor, the United States, was more than enough to trigger a Loonie selloff. As it turns out, the U.S. is still miles away from achieving a recovery in the housing market at shown by its new home sales release.

Meanwhile, U.S. crude oil inventories showed signs of normalizing as the report showed a deficit of 2.4 million barrels after shooting up by 8.5 million barrels last week. Despite this, the U.S. Energy Information Administration says that the total stockpiles amount to 365.2 million barrels, which is way above the upper limit of the usual range at this time of the year. With an oversupply of oil still being an issue, oil prices dipped and dragged the oil-related Loonie down in the process.

There are no reports due from Canada today, which means that the Loonie could be extra sensitive to risk sentiment again. Don't forget to check out the U.S. red flags on today's schedule to figure out whether risk will be on or off for the day!

[PipDiddy]

For the first time in four days, Loonie bulls were able to take control of USD/CAD. Thanks to improved risk appetite, traders gobbled up the Canadian currency, sending USD/CAD down 45 pips to completely erase the previous day's losses and end the day at .9808.

Thanks to Spain's budget plans and China's huge liquidity injection, the market's appetite for high-yielding currencies (such as the Loonie) was strong. It didn't even matter that Canada didn't have any reports for the markets yesterday!

But today is a different story as it's scheduled to roll out its July GDP report, which most believe will show a growth of 0.1%, down from June's 0.2% expansion. Look for this report to trigger another round of Loonie buying if it posts better-than-expected results!

[PipDiddy]

Out of the way, Loonie sellers comin' through! With the markets still acting on risk aversion, USD/CAD ended up erasing a good chunk of its gains from Thursday as it rose 22 pips on the day. And it didn't stop there! Over the weekend, the pair gapped up from last Friday's close at .9831 to start the month at .9839!

Even though Canadian GDP came in stronger than expected in July, it wasn't enough to keep the Loonie afloat. The economy clocked in a growth of 0.2%, which was double the figure of the median forecast. Taking a look at the details, we see that manufacturing and retail sales picked up, but mining and construction edged lower in the month.

Today, we only have the RMPI on tap. The index, which measures the change in raw materials purchased by manufacturers, is expected to print a reading of 1.4% up from 0.9%.

This report isn't normally known to have strong, lasting effects on Loonie price action, but don't worry because later in the week we have much more weighty releases coming out.

On Thursday, we'll take a look at the Ivey PMI, seen at 59.0 from 62.5. And to end the week on Friday, building permits data (expected to show a decline of 0.7% following the previous month's decrease of 2.3%) and much-awaited employment figures will be available.

[PipDiddy]

Is USD/CAD’s .9850 handle strong or what? For the fourth trading day in a row, the pair was unable to break above the major psychological level as risk appetite tempered the Loonie bears yesterday. USD/CAD reached an intraday high of .9854 before it capped the day at .9798.

Aside from better-than-expected reports from the other major economies, it might have also helped the Loonie bulls that Canada printed positive news on its own. Though the industrial price index slipped by 0.1% in August and July’s figures were revised down to a 0.6% decrease, the raw materials price index came in at 3.4%. That’s a heck of a lot higher than its 0.8% growth reading in July!

The economic board is empty in Canada today, so I’m betting my neighbor’s cat that risk sentiment and oil prices will most likely dictate the Loonie’s price action today. Pay special attention to the Spanish news from the euro zone, as well as any whispers of a hard landing in the commodity-loving Chinese economy. After all, these news could very well dictate risk sentiment today!

[PipDiddy]

Ooh, that burns! The Loonie was unable to hold on to its recent gains against the Greenback as USD/CAD closed in the green yesterday. The pair dipped to a low of .9811 but managed to rally and close at .9844.

Canada didn't release any economic reports yesterday, leaving the Loonie at the mercy of risk sentiment. Unfortunately for the commodity currency, its fellow comdoll (AUD) got hit by an RBA interest rate cut during the Asian session. This had market participants speculating that the BOC might be forced to retreat from its hawkish stance or even join the easing bandwagon soon!

There are no reports due from Canada today so make sure you take note of U.S. economic reports if you're trading USD/CAD. The ADP non-farm employment change and ISM non-manufacturing PMI are on tap for today so stay on your toes during those releases!

[PipDiddy]

With risk aversion swaying the markets, USD/CAD broke higher and set new highs. The pair topped out at .9885 before settling at .9980, up 37 pips from its opening price. Could we see more of the same today?

For today, we’ve got the Ivey PMI report on tap at 2:00 pm GMT. Word on the street is that the index will print at 59.4, marking a slight decrease from last month’s reading of 62.5. This would indicate industry expansion, although at a slightly slower pace.

Take note though, that the last two releases have both printed better than expected. If today’s release gives us the same result, it may just help the Canadian dollar recuperate some of its losses from yesterday.

[PipDiddy]

Way to go, Loonie! The Canadian currency cashed in some gains against the Greenback yesterday as USD/CAD dipped back to the .9800 handle. At the end of the day, the Loonie was able to outpace the Greenback by 75 pips as USD/CAD closed at .9805.

Canada's Ivey PMI came in much better than expected for September at 60.4. Although this was slightly weaker than August's 62.5 reading, the actual figure was higher than the forecast at 59.2. This indicates that Canada's manufacturing sector continued to expand even if it did so at a slower pace during the month.

There are a bunch of red flags on Canada's schedule today so better listen up! Canadian building permits and jobs data are due 1:30 pm GMT, along with the U.S. non-farm payrolls report, so it's bound to be a volatile U.S. session for the Loonie.

Building permits are projected to drop by 0.7% in August, following a 2.3% decline in July. Canada's employment change figure could come in at 11.7K for September, which would be weaker than the 34.3K increase in hiring seen last August. Still, this should be enough to keep their jobless rate steady at 7.3%. Bear in mind though that weaker than expected data might force the Loonie to return some of its recent gains.

As for the NFP report, I believe my buddy Forex Gump has got this thoroughly covered in his latest trading guide. Go on and check it out!

[PipDiddy]

The Loonie followed up its big rally on Thursday with another winner as the markets' risk appetite continued to fuel demand for the Canadian currency. After trading as low as .9735, USD/CAD greeted the weekend at .9789, 16 pips below its opening price.

Practically everything that could've gone the Loonie's way went the Loonie's way. First, the U.S. NFP triggered a broad-based case of risk taking.

Then on the domestic front, we saw another month's worth of impressive employment data from Canada. Would you believe that a total of 52,100 jobs were added last month?! This figure was almost 5 times larger than the median forecast and is a solid follow up to the 34,300 jobs that were added the previous month.

In turn, this led the unemployment rate to rise from 7.3% to 7.4% as more workers returned to the workforce. No wonder the BOC has been so hawkish!

In other news, the building permits report printed a huge upside surprise of its own, showing a 7.9% increase amidst forecasts which called for a 0.7% decline. As it turns out, an increase in construction activity in the non-residential sector more than made up for a slight downturn in activity in the residential sector.

This week, we don't have many major events to look forward to, especially since Canada will be celebrating Thanksgiving today. The only red flag is the trade balance report due on Thursday, and it's expected to show a narrower deficit of 1.7 billion CAD. But until that report comes out, it looks as though we'll have to trade the Loonie based on risk sentiment.