Daily Economic Commentary: Canada

[PipDiddy]

Are those muscles I see? Why, yes they are! For the first time in three days, the Loonie was able to advance versus the safe haven Greenback. USD/CAD had begun the day at .9946 but eventually fell and traded at .9922 by the end of the U.S. trading session.

No major data was released yesterday, so the Loonie’s move was probably the effect of investors taking profit on the recent move up of USD/CAD.

Today, there are a couple of tier 1 events lined up, namely the retail sales report and the BOC’s interest rate decision.

The Canadian retail sales report, which will be published at 12:30 pm GMT, is expected to show a 0.3% rise for the month of August. In July, the retail sales report printed a 0.7% increase. The core version of the report is projected to also show a 0.3% climb, down from the previous month’s 0.4% jump.

As for the BOC’s interest rate decision, it is widely expected that the central bank will keep rates unchanged at 1.00%. According to analysts, however, the accompanying statement could be bearish for the Loonie as the central bank could talk down interest rate hike expectations. If BOC Governor Mark Carney sounds dovish and continues to carry out a wait-and-see approach into 2013, we could see the Loonie sell-off again.

[PipDiddy]

The BOC participated in an early trick-or-treat game yesterday as they surprised the markets by keeping their hawkish feathers. As a result, the Loonie steadied against the Greenback despite the risk aversion and falling oil prices in the markets. What a treat, eh?

In its monetary policy decision yesterday, the BOC kept its rates unchanged at 1.00% and said that “some modest withdrawal of present considerable monetary policy stimulus will likely be required.”This is not only a departure from its “...stimulus may become appropriate” rhetoric last summer, but it’s also in contrast to the dovishness that BOC head honcho Mark Carney was projecting last week!

If you think that actions speak louder than words, then it’s not hard to believe that the BOC might not be as worried about the economy as they led us to believe. Heck, they even kept their growth forecasts unchanged for 2012 and 2013 and only slightly lowered their 2014 estimates.

Could it be that the devil is in the details? We’ll likely find out more about what the BOC thinks of the economy at 2:30 pm GMT when the central bank releases its monetary policy report, followed by the BOC press conference at 3:15 pm GMT.

[PipDiddy]

The Loonie looked as though it was finally gonna bag some pips at the start of the day. But it finally gave way to selling pressure in the New York session as traders took USD/CAD from an intraday low of .9889 to end the day at .9949, up 23 pips from its opening price.

Demand for the Loonie suddenly died down after BOC Governor Mark Carney made it clear that there isn't a pressing need for higher rates at the moment. But for those of you who have been hoping for a rate hike, don't lose hope! He also said that rates are likely to go up in the long run. Just don't hold your breath waiting for a rate hike!

Nothing on the economic calendar from Canada today. Y'all know the drill! Keep tabs on risk sentiment in the meantime, fellas! Remember, the Loonie tends to rally when risk appetite is healthy.

[PipDiddy]

Still not much action on USD/CAD. After an entire day's worth of trading, it ended just 9 pips above its opening price. Will today be any different?

It's tough to say, but don't expect anything from Canada to shake up the market because it isn't scheduled to publish any economic releases today.

So if you plan on trading USD/CAD, I suggest you take a look at what the U.S. has to offer. It's supposed to publish GDP data in the New York session. Don't miss it!

[PipDiddy]

Yeouch! Since there were no reports from Canada last Friday, the Loonie traded on risk sentiment. And boy did it hit the Loonie bulls hard! USD/CAD closed 40 pips higher than its open price after hitting an intraday high of .9995.

Like many high-yielding currencies, the Loonie fell victim to the risk aversion that settled over the markets during the early trading sessions last Friday. But unlike its counterparts, the Loonie bulls weren’t in the mood to step up in the later trading sessions when risk appetite showed improvement.

No data is scheduled for release again today, so keep an eye out for other major events coming up! I hear that Japan is about to release its employment numbers. Better check our economic calendar just to be sure!

[PipDiddy]

The Loonie succumbed to overall Greenback strength, as USD/CAD climbed for the second consecutive trading day. USD/CAD rose 31 pips to finish at 1.0008, marking the first time in nearly three months that the pair has finished trading above parity.

With no data lined up once again, we’ll most likely see USD/CAD trading dictated by dollar flows. Keep in mind though, that with the storms hitting the East Coast, there’s a good chance we won’t see much liquidity in today’s trading. If you happen to live in an affected area, stay safe my friend!

[PipDiddy]

Yesterday marked a tiny victory for the Loonie, but after losing two days in a row, we'll take what we can get! USD/CAD traded as high as 1.0021 before it slipped back down below parity to end the day 15 pips lower at .9993.

The RMPI report printed an increase in prices of raw materials of 1.3% last month, which is just slightly above the median forecast of a 1.2% increase. Meanwhile, BOC Governor Mark Carney's speech turned out to be a dud as he failed to say anything new about the economy.

Hopefully, today's GDP report will get the markets going. It's expected to print a growth of 0.2% for the month of August, the same as what we saw in July. Should results exceed expectations, it could help the Loonie post larger gains against the Greenback. Be sure to catch the report as it comes out at 12:30 pm GMT!

[PipDiddy]

During the Tokyo and London sessions, the Loonie was on its way towards establishing a new high for the week against the dollar. However, due to a shocking GDP reading, USD/CAD quikly skyrocketed above parity after tapping an intraday low at .9960.

According to Canada's GDP report, the economy unexpectedly contracted in August by 0.1%. The actual reading was lower than the previous figure and the consensus, both of which were at 0.2%. A deeper look at the data reveals that the manufacturing sector's contribution to growth declined during the month and took its toll on the overall reading.

I wonder if the report is enough reason for the BOC to shift to a move dovish stance. We won't find out for sure until the next BOC rate statement though!

For today's trading, be sure to be on your toes for top-tier reports from the U.S. as they could possibly affect the Loonie. Good luck!

[PipDiddy]

Make that three in a row! Once again, USD/CAD closed lower, finishing 20 pips below its opening price at .9968. Will we see another victory for the Loonie bulls today or will we see USD/CAD make another run for parity?

We could be in for some wild moves on USD/CAD today, as we’ve got some serious red flags going up the economic totem pole during the New York session.

The headline event for today, of course, will be the NFP report. Don’t forget to check out my U.S. commentary for the details on this market mover!

But don’t forget that we’ve also Canadian employment figures headed our way as well! Expectations are that just 9,500 jobs were added last month, which would be poor follow up to the 52,100 increase we saw the month before. Meanwhile, the unemployment rate is expected to remain steady at 7.4%.

But hey, as my momma always used to say, you never know what might happen! If the employment data come in much better than expected, we could see the Canadian dollar end the week with another win!

[PipDiddy]

There's always an exception to the rule, and last Friday, it was the Loonie! The Canadian currency was the only major currency that gained ground against the Greenback, as it managed to end the day 12 pips higher.

What's so amazing about the Loonie's feat is that it did it without the help of employment data, which came in disappointingly right before the weekend. Instead of showing job gains of 9,500, the October employment report only revealed an increase of 1,800 jobs. Meanwhile, the unemployment rate was unmoved at 7.4%, just as expected.

Hopefully, we'll see better results from the building permits report due at 1:30 pm GMT today. The report is expected to show a 2.6% decline following August's 7.9% surge, but if September somehow manages to post a positive figure, it could help the Loonie extend its gains.

Later in the week, we have a couple more red flags. The Ivey PMI is due tomorrow at 3:00 pm GMT and is slated to slip from 60.4 to 58.3. Then at 1:30 pm GMT on Thursday, we'll have the trade balance report on tap. Expect Canada's deficit to widen from 1.1 billion CAD to 1.4 billion CAD.