Daily Economic Commentary: Canada

Trading Discussion News and Economy
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Is the Loonie aiming for parity with the Greenback again? Judging from Big Pippin’s chart art yesterday, it does look like it! The Loonie may have paused from its strong rally but it still was able to eke out a few gains against the Greenback, pushing USD/CAD below the 1.0100 mark.

Canada didn’t release any economic reports yesterday, which was probably why the Loonie’s gains were limited. The main driver of the Loonie’s price action yesterday was the rise in crude oil prices, which chalked up a 3.2% increase for the day.

It could be another quiet day in the markets today since most traders are still recovering from their Thanksgiving feast last night. Then again, traders might be on profit-taking mode just before the winter season dries up the liquidity in the markets. The day after Thanksgiving is usually known for having wild price movement, so better stay alert!

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Whoops! The Loonie slipped and gave up almost all of last week’s gains against the greenback last Friday when risk aversion clouded over markets and pushed high-yielding currencies like the comdolls lower. USD/CAD rose to an intraday high of 1.0247 before it closed 103 pips higher at 1.0200.

No reports were released from the land of maple syrup last Friday, but look out for the big-hitters this week! The fireworks will start today at 1:30 pm GMT when Canada releases its current account report. The difference in the economy’s export and import values is expected to widen to a 15.2 billion CAD deficit in the third quarter after clocking in at 11.0 billion CAD in the second quarter.

A report on the prices of raw materials purchased by manufacturers will also be released today at 1:30 pm GMT. The figure is seen to improve to a 1.0% growth in October after dipping by 0.4% in September, but a higher figure could bring back some of the pip-love for the Loonie.

Tomorrow at 1:30 pm GMT Canada’s GDP report for September will be released. Analysts are pegging the data at 0.1% from its 0.3% figure last August. Then, on Friday at 12:00 pm GMT we’ll get hold of Canada’s unemployment rate and employment change. Markets are estimating an increase of 17,500 workers for November, while the unemployment rate is projected to remain at 7.9%.

Good luck in your trades this week!

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The Loonie weakened slightly against the Greenback as its southern neighbor proved to be the dominant currency once again. After rising 90 pips from its opening price of 1.0169, USD/CAD fell back to limit its losses to a 17-pip slide for the day.

We got mixed results from yesterday’s releases. The raw materials price index almost doubled what was forecasted when it showed a 1.7% rise in the prices of raw materials purchased by manufacturers. Economic nerds worldwide attribute the large increase to higher prices in mineral fuels and metals.

It might be interesting to monitor this report in the future because if raw materials prices continue to increase at this rate, consumer inflation may follow as well, which may strengthen the case for more rate hikes.

On the downside, yesterday we learned that Canada’s current account deficit in Q3 widened more than anticipated. From a deficit of 13 billion CAD, it grew to 17.5 billion CAD, over 2 billion CAD more than expected.

A closer look at the underlying figures of this report reveals that exports dropped for the first time since Q2 2009 while imports continued to surge. The disappointing decline in exports raises concerns since Canada’s export industry is one of its biggest contributors to GDP. We saw just how dependent Canada is on the U.S. as weak demand from the U.S., its largest trading partner, took its toll on its trade performance in Q3.

In other news, the big day has finally arrived! Today, we finally take a look at Canada’s monthly GDP data. September is slated to show a 0.1% increase after August printed a 0.3% growth. Be sure to catch this release at 1:30 pm GMT because a stronger-than-expected figure could spark a Loonie rally and result in another test of parity for USD/CAD.

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Botheration! Risk aversion and disappointing economic data made the Loonie lose ground against the Greenback for the third day in a row yesterday. USD/CAD plunged 77 pips and fell to 1.0264 after it had hit an intraday high of 1.0287.

Canada’s GDP report wasn’t able to change the currency bears’ minds as it failed to meet expectations. Cooling export and housing demand weighed on the growth figures, with the third quarter GDP printing only a 1.0% improvement, and September’s figure clocking in a 0.1% decline. Needless to say, the figures didn’t sit well with markets as it signaled further weakness in the fourth quarter.

No reports are scheduled in Canada today, but keep close tabs on any events that might affect trading for commodity-related currencies!

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The Loonie bulls did a Katy Perry number yesterday as the Loonie went “oh, oh, oh and it shot across the pip-sky-y-y” on a rally in risk appetite. After popping up three days in a row, USD/CAD plunged by 94 pips and closed at 1.0171.

No economic report was released from Canada yesterday, but positive economic reports from China, the euro zone, and the U.S. boosted commodity-related currencies in the pip charts.

The board is empty again today in the land of the Black Crack, but keep your eyes peeled for any reports that might affect risk appetite! I hear that the ECB is slated to have a press conference, while the unemployment claims and pending home sales report will rock the U.S. session.

Watch your trades closely, folks!

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No Canadian reports? No problem! The markets went crazy for the Loonie yesterday and bought it up like it was going out of style. The broad risk rally saw USD/CAD fall 132 pips to approach parity and land at 1.0040.

Risk on! Calming words from the ECB and recent positive data from the U.S. have helped restore confidence in the markets, so investors found the courage to take on riskier assets once again. As usual, this benefitted the Loonie, which found further support from a rise in oil prices.

Hold on, playa! We’ve got more data on tap that may rock USD/CAD today!

At 12:00 pm GMT, Canada is set to reveal its latest employment figures. Analysts are hoping that employment saw a net increase of 19,800 in November after a soft 3,000 uptick in October. But this is expected to have no effect on the unemployment rate, which is expected to stay at 7.9%.

Since the U.S. is due to print its own employment data soon after, expect to see a bit of volatility in USD/CAD at around this time. Remember, be safe out there kids! Don’t trade without a stop loss!

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USD/CAD dipped close to parity last Friday right after the U.S. NFP report churned out disappointing figures. The pair hit a low of 1.0003 after the NFP release then rebounded to a high of 1.0081. Will it have another rendezvous with parity this week?

Both Canada and the U.S. printed disappointing employment figures, but the U.S. happened to be at the weaker end. Still, Canada’s employment change report came in below consensus as it printed a 15,200 increase in net hiring for November. Their jobless rate may have fallen from 7.9% to 7.6% during the month, but this was mostly due to a decrease in the labor force. It turns out that the Canadian youth have been leaving the labor force as their participation rate dropped to 63.2%, its lowest level in more than a decade.

This week, Canada is set to unload a bunch of high-impact economic reports and not to mention the BOC rate statement. It’s bound to get really exciting, I tell ya!

For today, the Canadian building permits and Ivey PMI are due. Building permits are expected to have fallen by 2.9% in October, after seeing a nice 15.3% jump in the previous month. Meanwhile, the Ivey PMI is also estimated to decline from 56.7 to 56.4 in November. Although this means that the manufacturing industry is still expanding, it indicates that the expansion is a tad slower. Stay tuned for the actual building permits report due 1:30 pm GMT and the Ivey PMI release at 3:00 pm GMT.

The much-awaited BOC rate decision will take place on Tuesday 2:00 pm GMT. Given the recent disappointing figures from Canada, particularly their recent negative GDP reading for September, it’s hard to imagine whether the central bank will have any reason to hike rates this time. They are expected to keep rates on hold at 1.00% and, if this decision is accompanied by a strongly dovish statement, USD/CAD could move farther and farther from parity.

Come Wednesday, the Canadian housing starts report will be released. Analysts are hopeful that the number of new residential buildings will have risen from 168,000 to 173,000 in November. Lastly, the trade balance is due on Friday and it is also expected to show a slight improvement. The deficit is estimated to have shrunk from 2.5 billion CAD to 2 billion CAD in October.

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Despite the mixed showing of some economic reports, the Loonie was able to hold its own against the dollar. Trading within a tight range of just 60 pips, USD/CAD finished just 13 pips from its opening price to end the day at 1.0050.

Building permits dropped by 6.5%, much worse than the anticipated 2.9% decrease. In addition, the previous month’s figure was revised down to 14.9%. This indicates that construction industry isn’t as well off as previously thought.

On the bright side, the Ivey PMI came in to beat consensus, printing a reading of 57.5. Experts had pegged the index to come in at 56.4. This was almost in line with the previous month’s figure of 56.7, indicating that there is still growth in the manufacturing industry.

Seeing as how we’ve been receiving mixed or dismal results from Canada that past few weeks, I don’t think the Bank of Canada will be raising interest rates today at 2:00 pm GMT. Word is that BOC head honcho Mark Carney will be keep rates steady at 1.00%.

Watch out though, for any accompanying statements that indicate that the central bank would be open to raising rates by as early as next quarter. The BOC had been rather pessimistic in the past, so if there is any change in the tone of their statement, it could send the market into a frenzy! You don’t wanna get caught in an avalanche of wild moves do you?

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Farewell, parity! The Loonie waved goodbye to parity against the dollar yesterday as USD/CAD moved higher up the charts. As the BOC held interest rates at 1.00% and made some cautious comments, the pair rose from its intraday low of 1.0012 and finished over 100 pips higher.

What could’ve potentially taken USD/CAD below parity instead made it move further away! Yesterday’s BOC rate decision proved to be a downer for the Loonie even though markets had already widely expected the central bank to hold rates at 1.00%.

I don’t like pointing fingers, but I have a feeling it had something to do with what BOC Governor Mark Carney said. There was a notable tone of concern in his voice as he expressed that the economy looks “slightly weaker” than expected and that growth continues to struggle.

One of the biggest problems that the central bank faces is that its economy is heavily dependent on the U.S., which is experiencing tough times itself. As such, the central bank is probably waiting for signs of recovery from the U.S. before it makes any changes to its monetary policies.

Due today at 1:15 pm GMT is the November housing starts data. Analysts believe that construction activity picked up last month as the annualized number of homes that began construction is expected to have increased from 167,900 to 173,000. Don’t miss this one because a large upside surprise may cause USD/CAD to reconsider parity!

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“Stop right there!” said the Loonie to USD/CAD. With help from positive housing starts data, the Loonie was able to end its two-day slide against the USD, squeaking out a 5-pip gain against its American counterpart.

The only piece of economic data we got yesterday was a better-than-expected housing starts figure. November clocked in an annualized number of 187,200, which exceeds forecasts for 173,000 and marks a significant improvement from the previous month’s 167,800.

After experiencing slow growth over the summer, the positive results came as a breath of fresh air as they suggest that Canada’s housing market has finally stabilized. Analysts attribute part of the increase to a decline in long-term interest rates. If you think about it, this makes a lot of sense as consumers are more likely to borrow money for home construction if the cost of borrowing isn’t so painful.

Today, we have more housing data rolling out! Canada’s house price index is due at 1:30 pm GMT and is expected to show a 0.1% uptick after September posted a 0.2% rise. Following yesterday’s awesome housing data, a big upside surprise in this report could provide further support for the Loonie and send it back towards parity against the USD!

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USD/CAD was stuck in a range as tight as Katy Perry’s jeans during yesterday’s trading! It tapped an intraday high of 1.0126 and bottomed at 1.0067. By the end of the New York session, it was parked at 1.0105 with a 4-pip gain for the Loonie.

I’m sure that 4 pips is not exactly the teenage dream of Loonie bulls, but a win is still a win. I bet if the house price index for October fell short of expectations, the comdoll would have incurred a loss instead. According to Statistics Canada, house prices increased by 0.1% during the month, just hitting the market’s target.

See if Canada’s trade balance report for October, due later at 1:30 pm GMT, will be able to spark fireworks for the Loonie. Analysts are predicting that the country’s trade deficit narrowed with imports outpacing exports only by 2.1 billion CAD, following September’s 2.5 billion CAD deficit.

Remember to be extra careful out there today. Word on the street is that China could raise rates this weekend! Yikes!

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Just as the Canadian welterweight champion, Georges “Rush” St.-Pierre, gave Josh Koscheck a beating in UFC 124, the Loonie pummeled its American counterpart last Friday. But unlike the one-sided championship bout, the Loonie faced a tough battle and was only able to squeeze out an itsy-bitsy 11-pip gain over the dollar. Positive data from both sides of the border saw USD/CAD close just below 1.0100 to end the week.

Not only was the Loonie able to benefit from a rise in commodities last Friday, but it also reported better-than-expected numbers! According to its latest trade balance, from 2.3 billion CAD in September, its deficit had shrunk to just 1.7 billion CAD in October.

Even though this marked Canada’s sixth straight month of posting a deficit, these figures came as a positive surprise because analysts had expected the deficit to remain large at 2.1 billion CAD.

Loonie bulls have strong metals exports to thank for the awesome results. But bears may eventually have the last laugh as it was noted that Canada’s surplus with the U.S., its largest trading partner, had fallen to its lowest level since 1992! It’s hard to imagine Canadian trade taking off with its largest market lagging behind.

In the week ahead, you can look to trade a number of economic events.

First off is a speech to be delivered by BOC Governor Mark Carney today at 5:10 pm GMT. I’m sure you’re aware that as the head of the central bank, whatever he has to say may potentially rock the Loonie. I don’t think I have to remind you not to miss this!

Tomorrow, we pick up with a couple of reports rolling out at 1:30 pm GMT.

Canada’s quarterly labor productivity is due and is expected to show a cool 0.3% uptick following the previous period’s 0.8% downtick. At the same time, October’s leading index will be available and is expected to double the previous month’s 0.2% rise.

On Wednesday we take a look at how the manufacturing industry is doing as the most recent manufacturing sales report is scheduled for release. October is anticipated to show a respectable 0.8% increase in sales, a nice rebound from September’s 0.6% drop.

You know the drill! Upside surprises are usually bullish for the Loonie, so stay alert!

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Is the Loonie ready to give parity another shot? USD/CAD continued to move further south yesterday as a positive capacity utilization rate helped boost the Loonie. The pair had hit an intraday low of 1.0028 before it finished the day at 1.0078 to lock in an 18-pip gain.

The Loonie began the day quite well with help from a better-than-expected capacity utilization rate. The rate, which measures the degree to which resources of producers are utilized, came in at 78.1% in Q3, up from 76.9% in Q2.

This strong figure is awesome for two reasons. First, it beat forecasts for a rate of 76.6%. And second, it’s considered an indicator of future inflation since producers tend to raise prices when they operate at high capacity.

Unfortunately, the Loonie gave back much of its early gains later in the day when BOC Governor Mark Carney stole the show. In his speech yesterday, he was quite dovish and seemed very worried about the outlook for the Canadian economy. Weakening domestic demand and the gloomy state of the global economy were some of the things he touched upon.

Another one of his biggest concerns was Canada’s high level of household debt. He said that because Canada’s interest rates have been accommodatingly low, many have racked up large amounts of debt. The BOC is afraid that the low interest rates might encourage excessive risk-taking.

If you want to look on the bright side, this could result in more rate hikes in the distant future as the BOC may want to make borrowing more expensive by tightening its policies. But don’t hold your breath. The BOC has made it clear that they don’t plan on raising rates in the coming months. We’ll probably have to wait until mid-2011 to get a rate hike.

Today, Canada is set to unveil its quarterly labor productivity report. According to forecasts, Canadian workers slacked off in Q3 and decreased their productivity by 0.1% after posting a 0.8% decline in productivity in the previous quarter. Catch the actual results at 1:30 pm GMT.

Likewise, the leading indicator report is due at 1:30 pm GMT. The report, which was made to predict the future direction of the economy, is expected to increase its reading by 0.5% in November, after printing a 0.2% uptick in October. As usual, be prepared for a bull run in case the data comes in better than expected!

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Despite mixed economic reports, the Loonie was still able to bag pips from the dollar in yesterday’s trading. Bears pounced on USD/CAD during the New York session, making the comdoll feel so fly to end the day with an 11-pip win at 1.0066.

Let’s go through the lineup of economic reports we had yesterday, shall we?

We saw that the Canadian leading indicators rose by 0.3% in November, matching the pace of growth in October, but disappointing the 0.5% consensus. Motor vehicle sales for October also failed to impress when it fell by 0.3%, and missed the 3.3% uptick that the analysts were eyeing.

On the other hand, the labor productivity report for the third quarter came in as a pleasant surprise when it printed a 0.1% increase and beat the 0.1% decline that the market was bracing for.

BOC Governor Carney also spoke, expressing his concern about the trouble in Europe having negative effects on the Canadian economy. Good thing he didn’t give traders panic attacks. Whew!

See if the manufacturing sales report for October, due later at 1:30 pm GMT, will help the comdoll hold on to its gains. Note that the forecast is for a 0.9% increase to follow the 0.6% drop we saw in September.

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Hooray for the Loonie! It was the only major currency that was able to hold its ground against the Greenback yesterday, as USD/CAD dipped close to parity again. Are there any catalysts on deck for a break below 1.0000?

Well, Canada’s economic calendar is almost bare, save for the release of their foreign securities purchase report. This could reveal the demand for the Canadian dollar in October. However, the report is expected to show that purchases of Canadian securities slowed from 12.25 billion CAD to 10.97 billion CAD during the month. A better than expected figure could bring USD/CAD back to parity again so watch out for the actual release due 1:30 pm GMT.

Make sure you check out the U.S. economic reports due today also since these could have a huge impact on risk sentiment. Bear in mind that, with lower liquidity this week before Christmas, volatility tends to go wild!

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The Loonie gave back some of its recent gains to the Greenback yesterday, as USD/CAD climbed to high of 1.0076. Weak data from Canada was the most likely culprit for the Loonie’s losses.

Purchases of Canadian securities reportedly slowed in October as the amount fell from 13.36 billion CAD to 9.51 billion CAD during the month. This was short of expectations at 10.97 billion CAD, which means that demand for the Canadian dollar was also weaker than projected.

Canada isn’t set to release any economic reports today so the Loonie might be in for some quiet time. However, as Forex Gump mentioned, lower liquidity during this holiday season tends to push volatility higher. Make sure you stay on your toes!

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Given the absence of economic hollers from Canada, the Loonie’s loss to the dollar wasn’t as surprising as Paramore’s breakup. USD/CAD skyrocketed to its closing price of 1.0129 after it dipped to an intraday low of 1.0039, bustin’ 69 pips from the Loonie.

But don’t worry because this week’s roster of high-caliber economic reports could make the Loonie not that easy for the dollar to bully!

We start later with October’s wholesale sales report at 1:30 pm GMT. The market is eyeing a 0.7% uptick, following a 0.4% increase in the value of sales in September.

Then tomorrow, we’ll get dibs on Canada’s inflation and consumer spending. The headline figure for November’s CPI report, due at 12:00 pm GMT, is expected to show a 0.3% increase, while the core reading is seen to come in at 0.2%. On the other hand, the retail sales report is anticipated to show that consumer spending rose by 0.5% in October after printing a 0.6% increase in September.

Then on Thursday, we have the GDP for October which is projected to show that the economy expanded by 0.3%.

Whew! We have quite a lot of figures to watch out for the Loonie, huh? Make sure you’re ready to catch ‘em pips!

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Lonely was the Loonie yesterday as it became the only com-doll to lose against the dollar. Boo hoo! USD/CAD skyrocketed to an intraday high of 1.0209 before ending the day 35 pips higher at 1.0163.

Word on the street is that aside from risk aversion, Canada’s wholesale sales report might have also weighed down the currency. The market had been expecting a 0.8% uptick in October but the report showed that sales were flat during the month.

Our economic calendar suggests that the spotlight will be focused on the Loonie today with data on inflation and consumer spending on tap.

At 12:00 pm GMT, November’s CPI report is anticipated to show that consumer prices increased by 0.3%. Meanwhile the core reading, which excludes volatile items such as food and energy, is eyed at 0.2%.

Along with that, the retail sales report will also be released. The consensus forecast is for a 0.5% uptick for October to follow the 0.6% figure we saw in September.

Watch out for better-than-expected figures as they could spur the Loonie’s rally!

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Ping ping ping ping!!! The Loonie lost another round to the Greenbackyesterday on mixed economic reports from the land famous for its black crack. USD/CAD rose to an intraday high of 1.0207 before leveling off with a 12-pip gain at 1.0175.

Canada’s inflation numbers continued to show weakness when the headline data clocked in a 0.1% growth in in November while the core figure showed no growth for the month. This brought the annualized rate down to 2.0% from its 2.4% figure in October. Word around the pip streets is that Canada’s inflation will remain subdues unless the economic growth in the U.S. gains momentum.

Good thing the retail sales report took out some of the sting of inflation numbers. The data printed a 0.8% rise in October while the core figure showed a 0.9% growth on strong demand for furniture and economics. Guess you can’t keep Canadians from buying those iPads, eh?

No economic report is scheduled for today, but keep close tabs on any reports that might affect risk sentiment or comdoll trading.

Enjoy the rest of the week, folks!

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Boy did traders go loony for the Loonie yesterday! USD/CAD traded lower as soon as it opened at 1.0175, reaching an intraday low of 1.0111. It then spiked up to tap a high of 1.0178, but since Greenback got nothing on Loonie, the pair went back down again to close the day at 1.0142.

Aside from disappointing economic figures from the U.S. weighing down the dollar, another reason for the Loonie’s was the surge in the price of oil to its 2-year high. Remember that oil is Canada’s biggest export and the Loonie usually rallies along with the commodity.

Our economic calendar shows that we will have the GDP figures for October due later at 1:30 pm GMT. If it prints a figure better than the 0.3% growth that the market is expecting, we may just see the Loonie hustle to parity!