Daily Economic Commentary: Canada

Trading Discussion News and Economy
346

“[I]I’m on a high, on a high, there’s nothing more to it…[/I]” Despite the lack of economic reports from the economy, the Loonie danced to Duncan Sheik’s number on greenback weakness. USD/CAD dropped by 70 pips from its open price at 1.0217 after hitting an intraday low of 1.0182.

Will the Loonie get more pip lovin’ today? The big GDP report is scheduled for release at 12:30 pm GMT. Market junkies expect the figure to climb by 0.3% in August after dropping by 0.1% last July, but a higher figure might ease the worries caused by the speeches made by Bank of Canada Governor Mark Carney early this week.

Data on raw materials purchased by manufacturers will also be out today at 12:30 pm GMT, and a figure higher than the expected 0.3% growth figure in September could push the Loonie further up the charts.

Lastly, the change in prices of goods sold by manufacturers will be on tap today at 12:30 pm GMT. Analysts peg the figure at a 0.5% growth in September, but a higher number could mean more demand for the companies’ goods.

347

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.

348

Yes, the dollar rose across the board… except against the Canadian dollar that is! USD/CAD managed to scrape its way 36 pips lower to close at 1.0153. How did the Loonie bears manage that?

With no data coming out from Canada, it was somewhat surprising to see the Loonie take some pips away from the dollar bulls. If you ask me, it probably had something to do with oil trading, which remains resilient. Crude oil is now at 83.50 USD a barrel, and some suggest that it may make a run for the 90.00 mark.

Once again, not data coming out from Canada today, and with the U.S. in the middle of mid-term elections, we may see more range like behavior during the U.S. session. Then again, someone may something pretty drastic and move the whole markets, so always, be on your toes!

349

Despite the lack of economic data from Canada, the Loonie was still able to remain well-bought yesterday and rally against the Greenback. USD/CAD ended the day at 1.0091, almost 70 pips lower from its Asian session price.

What do you think brought about the Loonie’s rally? Hah, risk appetite of course! Apparently, the unexpected 0.25% rate hike from the Reserve Bank of Australia during the Asian session triggered a wide-reaching case of risk taking in the markets, which helped currencies like the Loonie strengthen.

Canada’s data cupboard is barren again today, but we’ll be seeing some very important reports from its next door neighbor, the U.S. The upcoming reports – the ADP non-farm change, the ISM non-manufacturing survey, and the FOMC statement – can create a lot of wild volatility swings, so don’t trade them unless you know what you’re doing!

350

The Loonie isn’t one to get left out. It joined yesterday’s winners club, too! Though its gains were a lot more modest compare to others’, it also rose against the Greenback. USD/CAD closed 29 pips lower at 1.0053, but only after spiking up to 1.0157 when the FOMC made its much-awaited statement.

The Loonie’s advance was probably limited because of Canada’s strong ties with the U.S. As you know by now, the U.S. is its largest trading partner, and so trouble in the U.S. can easily cross the border and affect Canada as well.

Up ahead, we have the Ivey PMI on tap. If you recall last month, the index printed a solid rise from 65.9 to 70.3 for the month of September, suggesting that the economy is chugging along just fine. This time around, a more modest reading of 65 is expected. Though it’s a downgrade from September’s awesome results, it’s still quite encouraging as it is well beyond the reading of 50.0, which indicates expansion. Put on your trading hats and catch it at 2:00 pm GMT!

351

Just like the bird it was named after, the Loonie flew to the skies yesterday! Shrugging off a weaker-than-expected Ivey PMI report, USD/CAD fell from an intraday high of 1.0122 and settled about 30 pips lower for the day at 1.0023.

We saw another Loonie rally yesterday thanks to the Fed’s bond-buying program. But its gains were probably cut short for a couple of reasons.

First, Canadian purchasing activity declined much sharper than expected according to the latest Ivey PMI report. A reading of 65.0 was expected to follow September’s 70.3. Instead, October decided it would pull a fast one on the markets and dropped to 56.7! This wasn’t the kind of surprise many were hoping to see.

Second, Canada rejected Australia’s BHP Billiton’s bid to take over its Potash Corp. The takeover could have helped extend the Loonie’s gains as it would naturally require a lot of Loonie buying to execute the transaction.

We’ve got a few more hard-hitters coming our way today.

At 11:00 am, Canada’s October employment statistics will be available. Forecasts are for a net increase in employment of 15,000 to follow the previous month’s net decrease of 6,600. According to analysts, this probably won’t cause a shift in the unemployment rate as it is predicted to hold steady at 8.0%.

Then at 12:30 pm GMT, we see the change in total value of new building projects authorized for construction in September. The building permits report is anticipated to print a modest 2.8% rebound from the previous month, which sadly posted a 9.2% decline.

You know the drill! Be on the lookout for better-than-expected figures if you’re looking to get bullish today.

Last but not least, BOC Governor Carney is due to speak at the International Security Forum today. As usual, listen closely to what the head of the central bank has to say because he could give us clues about future policy decisions. Catch him at 7:00 pm GMT!

352

“Greenback’s got nothing on you Loonie,” sang traders as USD/CAD ended Friday 20 pips lower at 1.0002 despite the mixed employment figures from Canada. At the end of the week, the com-doll bagged a total of 187 pips against its counterparts. Boo yeah!

Statistics Canada reported that net change in employment only rose by a puny 3,000 in October, falling short of the 15,000 consensus. Wait! Before you go into a panic attack, know that the report isn’t as bad as the headline figure suggests.

Digging a little deeper we see that it was part time employment that took a toll on the report when it fell by 44,200 during the month. On the brighter side of things, there was a total of 47,200 people that were hired as full-time workers. See, that ain’t so bad, right?

Making things even better was the unemployment rate that tapped in at 7.9% in September which was 0.1% lower than the consensus and the previous reading.

For today we’ll have the housing starts report for October due later at 1:15 pm GMT. But hopes aren’t high for the report with the forecast down to 181,000 from 186,400 in September.

Then tomorrow we’ll get more dibs on the housing market with the house price index for September at 1:30 pm GMT. The market is eyeing a 0.5% increase in house prices during the month to follow the 0.1% growth in August.

Be on your toes also for BOC Governor Mark Carney’s speech tomorrow at 5:15 pm GMT. You may want to brace yourselves for dovish comments as the BOC has become more concerned about its outlook for the economy. Word on the street is that Carney even warned of a possible intervention at the wake of “extreme movements” in the currency market. Yikes!

That’s all I have for y’all today. Happy trading!

353

Is the Loonie gonna start flying south for the winter? Yesterday’s price action on USD/CAD seems to suggest it. The pair failed to cross parity yesterday and, instead, climbed higher to hit 1.0038 after opening at 1.0009.

Aside from USD strength, USD/CAD was lifted up by a disappointing Canadian housing starts report. The seasonally adjusted annual rate of housing starts was expected to soften from 185,000 to 181,000, but instead, October printed much worse at 167,900. Analysts were able to pinpoint the cause of the decline and named the drop in urban single starts in all regions save for Atlantic Canada as the culprit.

Up ahead, we have the September house price index. The index is expected to print higher for the and is anticipated to show a 0.3% uptick following the 0.1% rise of the previous month. Will the worse-than-expected housing starts report also translate to a worse-than-expected housing price index? Tune in at 1:30 pm GMT to find out!

Then at 5:30pm GMT, BOC Governor Carney takes the microphone and spits out sick rhymes about “Canada and Global Financial Reform.” Don’t miss what he has to say because he may just decide to speak about what the central bank may do in the future.

354

Southbound for the winter it is! The Loonie continued its move down yesterday as the Greenback strengthened against the comdolls once again. After retesting parity and dropping down to .9980, USD/CAD rose and managed to close 37 pips higher for the day at 1.0074.

Economic data released yesterday did little to prevent the Loonie from sliding further. The house price index printed below expectations by showing a 0.2% increase instead of 0.3% in September. Still, this marks a modest improvement from the previous month’s growth of 0.1%.

Now onto BOC Governor Mark Carney’s little speech! Yesterday, the big man came out to say that the Loonie’s current position is reflective of Canada’s economic fundamentals. Could this be his way of agreeing with the Loonie’s rise to parity?

He also added that high household debt, together with a weak U.S. export market, may result in a more modest growth for Canada. With words like that, it doesn’t sound like we’ll be getting any rate hikes soon.

On tap for today is Canada’s trade balance report. The month of September is anticipated to exhibit a widening of the 1.3 billion CAD deficit to 1.4 billion CAD. Given the disappointing Ivey PMI numbers we’ve been seeing lately, a wider deficit certainly wouldn’t be all too surprising. Catch the report at 8:30 am GMT!

355

As soon as it opened at 1.0074, it was all downhill for USD/CAD during yesterday’s trading. It hit a few spikes at the wake of disappointing trade figures but the pair was still able to park at parity at the end of the day. And sha-bam! With a 74-pip gain, the Loonie erased the losses it posted against the dollar from past couple of days and became the the ultimate hotshot among the com-dolls. Up top yo!

  But it may not be all good in the hood for the currency as Statistics Canada reported yesterday that [imports](http://www.babypips.com/forexpedia/Imports) outpaced [exports](http://www.babypips.com/forexpedia/Exports) by 2.5 billion CAD in September. The market was only bracing for a softer fall to 1.6 billion CAD to follow the 1.5 billion CAD trade deficit it posted in August. 

  The worse-than-expected [trade balance report](http://www.babypips.com/forexpedia/Trade_Balance) has gotten a few traders already bracing for more bearish comments from the [BOC](http://www.babypips.com/forexpedia/BOC) because the negative figure could be pinned to the strength of the Loonie on the charts. Yikes!

  So what fueled the com-doll’s rally yesterday? 

  Naysayers are citing that it was none other than [oil](http://www.babypips.com/school/black-crack.html), Canada’s biggest export. With that said and given the absence of economic reports for the Loonie today, you may wanna keep tabs on the commodity as the currency sometimes moves along with it on the charts.

  Happy trading y’all!
356

The Canadian dollar traded slightly higher yesterday, falling victim to a strengthening dollar. Still, the pair has remained within range, as it has yet to breach through the 1.0100 handle and closed just 32 pips higher to finish trading at 1.0032 yesterday. Is it only a matter of time before this pair busts out?

No data was released yesterday and with the U.S. on holiday (Veterans Day), it’s no surprise that Loonie trading was tight. While there’s nothing coming out on the economic calendar today from Canada, be sure to stay on your toes and be ready for any strong moves. The G20 meeting are under way and who knows when some financial hotshot might say something to rock the markets!

357

The Loonie fell victim to the dollar last Friday, as it traded 60 pips higher to end the week. Still, the pair was unable to close above key resistance at 1.0100. Will the pair bust through this week? Or will it remain with range?

It’s been no surprise that USD/CAD has been stuck in a range. While the U.S. dollar was the king of the hill last week thanks a new wave of risk aversion, the Loonie has remained resilient. This signals to me that the CAD is relatively strong, at least amongst higher yielding currencies.

With no high impact reports scheduled for release from Canada today, we may see tight trading on USD/CAD yet again. Watch out though, for the U.S. retail sales report due at 1:30 pm GMT. This report will most likely be the main driving force of currency flows during the London and New York trading session.

358

Aha, it looks like someone has been sneaking pips from the dollar! Without any major report on tap yesterday, the Loonie tapped a 19-pip gain against its counterpart as USD/CAD closed the day at 1.0092.

We only had a third-tier economic holler from Canada, with the new motor vehicle sales report for September printing a 4.2% uptick and beating the 3.2% forecast.

But in this old man’s humble opinion, the Loonie’s rally might have been because commodity prices stabled during yesterday’s trading after Friday’s sell-off.

With that said, you may want to keep tabs on the commodity markets and pay special attention to oil as it is Canada’s biggest export. Along with that, make sure you’re glued to the tube later at 1:30 pm GMT for the manufacturing sales report which is seen to post a 0.3% decline for September.

359

Boy, was the Loonie’s performance yesterday loony! Just after USD/CAD dipped to an intraday low of 1.0070, it skyrocketed past two psychological handles and ended the day 129 pips higher at 1.0221.

As you probably know by now, risk aversion dominated market sentimentthanks to Europe’s debt woes. Rumors of China preparing for another rate hike then gave traders one more reason to flee from com-dolls as further tightening in China could curb demand for exports coming from Australia, New Zealand and Canada.

The Loonie wasn’t spankin’ on the economic front either. It was reported yesterday that manufacturing sales declined by 0.6% in September and fell short of what was anticipated by 0.1%.

Our economic calendar shows that we don’t have anything scheduled for the currency today. But don’t think that this should make you less careful in trading the Loonie because ongoing talks about sovereign debt and continued speculation on a Chinese rate hike could make it very volatile. Yikes!

360

I guess the comdoll connection didn’t work this time! The Loonie got left behind the other comdolls yesterday when it lost against the dollar despite the absence of economic reports in Canada. USD/CAD ended the day 22 pips higher at 1.0243 after dropping to an intraday low of 1.0181.

Was it because prices of black crack hit its lowest in nearly a month? Since Canada is one of the largest producers of oil, a drop in prices would mean less demand for the Loonie.

We’ll know more about the direction of the Loonie today when the foreign securities purchases report is released at 1:30 pm GMT. A number higher than 11.09 billion CAD would mean that more foreigners are willing to buy Canadian securities.

The monthly leading index and wholesales report will also be released at 1:30 pm GMT. An improvement from the 0.1% leading index decline in September could be bullish for the Loonie, and an increase in wholesale sales higher than 1.2% might also provide the Loonie some support.

361

It was all downhill for USD/CAD after it opened at its intraday high of 1.0244. When the North American session came to a close, the Loonie had pared its loss on Wednesday with the pair parked at 1.0211. Ha! Who’s bringing sexy back now Greenback?

  Some naysayers aren’t impressed with the com-doll’s performance though. According to them, given yesterday’s strong economic data, a rise in the price of [oil](http://www.babypips.com/school/black-crack.html) which is [Canada's](http://www.babypips.com/school/canada.html) biggest [export](http://www.babypips.com/forexpedia/Exports), and a Brazilian mining company looking to invest in the country, the Loonie should have gotten more out from the dollar.

  On the economic front, leading indicators posted a 0.2% uptick in October, overshooting the market’s 0.1% forecast, and erasing the 0.2% decline it posted in September.

Then there was the Wholesale Sales report which showed that consumer spending in September was four times higher than what analysts had predicted at 0.4%.

  We also saw that foreign investors were diggin’ the Loonie in September as the Foreign Securities Purchases data showed that demand for the currency was higher at 12.25 billion CAD than the consensus forecast of 8.16 billion CAD. Then again, perhaps the stellar figure was offset by the downward revision made in its previous reading from 11.09 billion CAD to 10.37 billion CAD.

  See if the Loonie will be able to hold on to its gains in today’s trading by gauging [market sentiment](http://www.babypips.com/school/what-is-market-sentiment.html). Remember that risk appetite is usually bullish for the currency. Peace out!
362

Unlike its com-doll counterparts, the Loonie looked like it was just chillin’ like ice cream fillin’ when China hiked its reserve ratio requirements. It fell modestly to 1.0234 against the dollar after the announcement but recovered alongside stocks during the New York session, ending the day with a 37-pip gain at 1.0179.

Our economic calendar is still blank for reports from Canada today. Boo! So let’s see if there’s enough risk appetite left in the market to spur the Loonie for its third straight win against the dollar.

Don’t worry because tomorrow we’ll have the CPI and retail sales reports to sink our trading teeth into.

At 12:00 pm GMT, the headline inflation figure is expected to post a 0.2% uptick in October while the core rate, which excludes volatile items, is seen to come in at 0.1%. Then at 1:30 pm GMT, we’ll get dibs on consumer spending for September which is anticipated to have been higher at 0.7% following the 0.5% increase in August.

You better make sure you don’t miss these reports. Remember that the BOC has grown a bit pessimistic about the economy. If the actual numbers print lower than what the market expects, we may just see the Loonie trade lower as this would confirm speculations that interest rates will be left unchanged for the rest of the year.

363

Blame it on the comdoll connection! Despite the lack of reports from Canada yesterday, the Loonie weakened against its major counterparts on risk aversion in the markets. USD/CAD rose by 12 pips after hitting an intraday high of 1.0218, while CAD/JPY fell 25 pips from its open price at 81.82.

Today Canada will make its own headlines when a slew of economic reports are released. The CPI report will start the parade at 12:00 pm GMT. Prices of goods excluding volatile items like food is expected to grow by only 0.1% in October from its 0.2% figure in September, but a higher number could bring back the pip-love for the Loonie since it increases the chances of an interest rate hike.

The retail sales report will also rear its head in the markets at 1:30 pm GMT. Sales of goods not including automobiles is estimated to remain at its 0.4% growth figure in August, but a higher number could also encourage the bulls to push the Loonie higher in the charts.

Happy trading, kiddos!

364

Just like other com-dolls, the Loonie took a hit in yesterday’s trading, as risk aversion was just too much to handle. USD/CAD rose from its opening price of 1.0176 to close at 1.0230. Meanwhile, after trading as low as 80.72, CAD/JPY retreated slightly to close at 81.28, leaving it with a 45 pips loss for the day.

Aside from renewed risk aversion thanks to the Korean tension and debt concerns in Europe, the Canadian dollar was also hurt by mixed news on homeland. CPI data came in better than anticipated, revealing that both headline and core CPI rose by 0.4% in October. This beat expectations of increases of 0.1% and 0.2% respectively. Remember, as inflation rises, it gives more incentive for the central bank to raise interest rates.

The bad news was that growth in September was weaker than expected. While core retail sales (which doesn’t include automobiles) hit expectations of 0.4% growth, headline sales showed growth of just 0.6%, failing to hit consensus of 0.7%. So while inflation may give reason for the BOCto raise rates, retail sales suggests otherwise. If the central bank raises rates, it could dampen retail sales growth, which the bank doesn’t want to happen. Let’s see how they balance this over the next few months.

Nothing coming out from Canada today, but if we learned anything from yesterday, it’s that we should ALWAYS stay on our toes – you never know what might hit the markets!

365

Black crack baby! Thanks to a surge in oil prices, the Loonie soared up the charts, posting its biggest gain versus the dollar in over a month. USD/CAD dropped 120 pips to finish the day off at 1.0111. Yeah boi! Do they celebrate Thanksgiving up in the Great White North?

Oil prices rose sharply yesterday, closing 3% higher. Remember, the Canadian dollar is highly correlated with oil, as it is one of Canada’s biggest exports.

With the U.S. market off for the holidays and nothing scheduled for release today, we may see low liquidity. Still, be sure to stay on your toes because you never know what may hit the markets!