At first, the Loonie looked as though it was going to edge lower down the charts last Friday. But midway into the London session, the release of reports from Canada and the U.S. re-energized the bulls and helped them claim victory for the day. USD/CAD entered the weekend at 1.0201 after hitting an intraday high of 1.0249.
Positive data from both sides of the border helped the Loonie get its groove back as respectable GDP figures from both countries helped reduce investor risk aversion. I guess investors began the Halloween weekend spook-free, eh?
On the Canadian side of the fence, the monthly GDP data came in just as expected. Analysts were right on the money when they predicted a 0.3% uptick in August to follow the 0.1% downtick in July.
The details of the report said that manufacturing, wholesale trade, and oil and gas extraction were the main drivers of growth in August. Again we see the importance of oil to Canada’s economy. It seems that all those road trips are finally paying off, huh?
If you recall, the Bank of Canada said earlier in October that it would carefully consider any further rate hikes. If the economy continues to show growth like this, the bulls may well find themselves on the receiving end of a rate hike. But we may have to take a chill pill in the meantime. The future is still very cloudy and the economy’s rebound isn’t certain yet, as the central bank is still very concerned about the patchy global recovery.
You’ll have to wait until Thursday for your first taste of high-impact data if you’re looking to trade news from Canada this week.
At 2:00 pm GMT on Thursday, the latest Ivey PMI numbers will be available. We saw a reading of 70.3 in September, but many say we will see this figure soften to 66.3 in October. As this report is often treated as a leading indicator of economic health, look for markets to react if the actual results don’t match forecasts.
To cap the week off on Friday, we will receive October’s employment data at 11:00 am GMT. While the unemployment rate is expected to hold steady at 8.0%, we’re told that we’ll probably see a net increase of 10,000 in employment. After seeing a decrease of 6,500 in September, an uptick in this department would come as a breath of fresh air.