After going through a setback last Friday, the loonie struggled to make headway and take advantage of greenback weakness yesterday. Today, traders have their eyes set on the BOC rate statement, which could be the main driver of USDCAD price action for the rest of the week.
But before we talk about the upcoming BOC rate decision, let’s take a look at the economic report Canada released yesterday. Foreign securities purchases nearly doubled from 5.95 billion CAD to 10.54 billion CAD in November, surpassing the forecast of 5.23 billion CAD. This brought the total foreign securities purchases for 2009 to 97.8 billion CAD, reflecting international investors’ confidence in the Canadian economy.
At 2:00 pm GMT today, the BOC will release its rate statement. Although the central bank is expected to hold rates at their current 0.25% level until June, further cautious remarks from BOC officials could force the loonie to give back its recent gains. Keep in mind that, since their last monetary policy meeting in December, Canada’s fundamentals started to show signs of weakness. Employment worsened, retail sales fell, manufacturing activity declined, and trade slowed down. Ouch!
Aside from that, another cause for concern for the central bank is the loonie’s recent strength. Could we be in for some currency intervention later today? Recall that the BOC has always been cautioning against the persistent strength of their local currency, which could then impede trade, inflation, and overall economic growth. I’d keep an eye out for some jawboning later on!
The Loonie got trumped by the dollar yesterday’s due to the BOC’s stance to maintain its current monetary policy. The USDCAD rose to as high as 1.0348 before settling at 1.0305.
The dollar started the US session on a positive note, though, its rise against the Loonie was tempered because of a 1.5% increase in Canada’s December leading index. The Loonie lost a lot of ground when BOC Governor Mark Carney and the rest of his crew decided to keep the central bank’s interest rate at a low of 0.25%. They also maintained their position to hold the bank’s current policy until the middle of this year.
Today at 12:00 pm GMT, Canada’s inflation figures will be due. Canada’s headline CPI is expected to have fallen to -0.1% from 0.4% on a monthly basis in December while the core version of the account is also seen to have cooled to -0.2% from 0.4%. On an annualized basis, Canada’s CPI is expected to be at 1.6% from 1.0% in December while the core account is projected to reach 1.8% from 1.5%. Nonetheless, the drop in Canada’s inflation figures during the month could give the Loonie another black-eye.
The Loonie experienced a serious beating in yesterday’s trading session. The USDCAD began Asia at 1.0304 but rallied to new yearly highs at 1.0490 during the US trading session. Considering the pair trades roughly 100 pips per day only, the move yesterday was pretty strong.
The December consumer price index (CPI) showed a drop of 0.3% in prices, three times the 0.1% decrease initially expected. The core version of the report that excludes the prices of volatile items such as energy and food also fell by 0.3% too. The consensus was only a 0.2% decline. The poor results of Canada’s inflation data gave currency traders more reason to believe that the BOC will not be hiking rates anytime soon.
We’ve got two important data from Canada slated for release today.
First up is the report on wholesales sales report at 1:30 pm GMT. The report is expected show that wholesale sales climbed 0.4% in November, which is slight improvement from the 0.3% seen the month before. Rising wholesale sales is usually seen as bullish for the domestic currency because it could mean that consumer activity is improving. If the actual figure comes out higher-than-expected, we could see some buying support for the Loonie.
More importantly though, at 3:30 pm GMT, watch out for the BOC’s monetary policy report that will be released. The report tends to garner a lot of attention because it gives traders a chance to understand the BOC’s take on Canada’s economic conditions.
The Loonie trickled lower as risk aversion reigned in the markets. The USDCAD closed at 1.0517, its highest level in about a month.
Wholesales data came out yesterday, printing a rise of 2.5% in wholesale sales. This was much higher than the projected 0.4% increase. This indicates that consumer spending is picking up. The uptick doesn’t surprise me too much. Take note that these figures were taken for the month of November, so retailers were probably just preparing for the Christmas holidays.
My buddies at the Bank of Canada also released their monetary policy report last night. In their report, BOC Governor Mark Carney said that interest rates would remain at current levels until mid 2010 at the earliest. In addition, the BOC believes that growth would peak at 4.3% during the 2nd quarter, while annualized growth for 2010 would be at 2.9%. BOC officials also expressed concern about the Loonie’s strength, hinting that it would continue to weaken exports. The recent losses of the CAD are probably a welcome sight to the BOC, but if the CAD does bounce back to test parity, who knows? We may just see some currency intervention…
Today, retail sales will be released at 1:30 pm GMT. Retail sales are expected to have dipped by 0.3% in November, while the core account – which excludes automobiles sales – is expected to post a 0.3% increase. Given how the wholesales report came in better than expected, we may be in for an upside surprise.
The loonie proved to be no match for the greenback’s strength last Friday after it saw Canada’s disheartening retail sales report. Core retail sales remained flat in November while retail sales dipped by 0.3%.
Canada won’t be releasing any economic reports until Friday, when it releases its GDP reading for November. After expanding by 0.2% in October, growth of 0.3% is expected for the succeeding month. However, the latest reported decline in retail sales could dampen growth and cause the actual figure to disappoint. If this happens, the loonie could lose more ground against the greenback this week.
Also due on Friday are the raw materials price index and the industrial product price index. Prices of raw materials are projected to be up by 1.5% in December while industrial product prices are expected to climb by 0.6%. If both forecasts are met, it would indicate that inflation is slightly moderated from the previous month.
Keep an eye out for economic events in the US this week. Aside from the fireworks to be caused by the FOMC rate statement and the fourth quarter US GDP reading, the Senate’s decision on whether to give incumbent Fed Chairman Ben Bernanke another term could cause a ruckus in the markets.
The USDCAD just traded between a very tight 50-pip range yesterday given the lack of economic flows in Canada and the US. The pair opened at 1.0583 and settled slightly lower at 1.0580.
Canada’s economic calendar is report-free today as well. Though, volatility might pick up later since the US will publish its CB consumer confidence index for the month of January. The index is seen to increase to 53.6 from 52.9. Upbeat confidence among consumers could start a rally for the high yielding assets, benefiting the Loonie.
The absence any major economic data from Canada put the USDCAD at the heels of risk aversion yesterday. From its Asian open price of 1.0580, it managed to climb to a high of 1.0692 before giving up some of its gains and closing US trading session at 1.0625.
The spike in risk aversion was mainly from the report that was going around yesterday that China asked some of its banks to increase there reserve ratios. It seems that traders took that as a sign that China, which is now the world’s second largest economy, believes that recovery still isn’t so sure about this ongoing “global recovery”.
With Canada’s economic cupboard empty again today, the USDCAD would most likely take its price action cues from data coming out of other countries. I’d keep a close eye on any open trades come 7:15 pm GMT as the Fed’s interest rate decision will be coming out that time…
The Canadian dollar trickled down lower against the USD as dollar strength was seen across the board. This left the USDCAD to close slightly higher at 1.0648.
Looks like USD sentiment is up, as traders reacted positively to the FOMCstatement. With nothing coming out from Canada today, watch out for news coming out from other countries that may act as catalysts for big moves. Also, I’d keep an eye on commodity prices. Oil prices have dipped recently, which has only helped the CAD’s decline. Take note that oil is one Canada’s major exports, so prices changes in oil have an effect on the value of the CAD.
We could be in for some volatile moves tomorrow, as the monthly GDP report will be available at 8:30 am GMT. It is expected that Canada’s economy grew by 0.3% from October to November. Also, the raw materials price index will also be coming out at 8:30 am GMT. It is expected to show that prices rose by 1.5% this past December. This report is an indicator of inflation, as any increases in the prices that manufacturers pay for their goods is normally passed on to consumers. If these reports come in to show higher figures than expected, it could provide some support for the slumping CAD.
The loonie stood no fighting chance against the greenback yesterday as risk aversion pushed the USDCAD above the 1.0650 area. In the absence of economic reports from Canada, the loonie easily gave way to greenback strength.
Canada will release its November GDP at 1:30 pm GMT today. The report is expected to show an economic expansion of 0.3% during the month, which would be a tad higher than October’s 0.2% growth. If the actual figure meets expectations, then the loonie could recover from yesterday’s fall.
Of course, that also depends on whether the US fourth quarter GDP meets the consensus or not. Also due at 1:30 pm GMT, the preliminary US GDP report is expected to print 4.5% quarterly economic growth. If the actual report disappoints, we might be in for another wave of risk aversion. Stay on your toes!
The dollar is on a very hot streak, winning the last 9 trading days against the Loonie. The USDCAD rose to and closed at 1.0692 from 1.0662.
Canada’s economy expanded by 0.4% in November, beating the 0.3% estimate. October’s GDP growth also was positively revised to 0.3% from 0.2%. Canada’s big brother, the US, also printed a strong 5.7% growth during the fourth quarter. Despite these upbeat figures, the Loonie still declined against the dollar as investors speculated that the Fed will raise its rates sooner than later.
Canada’s week will start with the release of its December building permits on Thursday. The number of newly issued building permits is seen to have risen by 2.9% after falling by 4.6% during the month prior. Such increase could give the CAD a much needed lift at least during the short term.
On Friday, Canada’s employment change and unemployment rate will be made public. Firms are seen to have absorbed about 15,200 more jobs in January after laying off 2,600 during the previous month. The country’s jobless rate, though, is seen to stay at 8.5%. An improvement in Canada’s labor market is generally bullish for the CAD. The expected improvement in the January employment change, therefore could also give the CAD some short term lift.
Thanks to the rebound in commodity prices, specifically the uptick in the price of crude oil, the Loonie was able to find some buying support in yesterday’s trading session. After opening the week at 1.0704, the Loonie found itself at 1.0609 by the end of the US trading session.
No economic data was released from Canada yesterday and we won’t be seeing any again today so expect the Loonie to be driven by the price action of commodities and economic data coming out of other nations, most especially the pending home sales report from the US at 3:00 pm GMT.
Make that two goals in a row! The Loonie trickled in a slap shot and scored against the dollar. The USDCAD now sits at 1.0575. Will we see a hat trick today?
The Canadian dollar benefited from a run of risk appetite last night, as it caused most other majors to gain versus the dollar. Furthermore, I took a look at commodity prices and saw that oil prices also rose yesterday. Always remember that the Loonie is sensitive to oil trading because oil is one of Canada’s major exports.
With nothing coming out today from Canada, expect CAD trading to be dictated by news from other countries, more specifically from across the southern border (the US). The ADP employment and the ISM non-manufacturing PMI reports are due today and could set the tone for risk sentiment ahead of the NFP report due later this week.
Tomorrow could bring more volatility as the building permits data and the Ivey PMI are both due at. New permits are expected to have risen by 2.9% in December, which would be a nice improvement from November’s decline of 4.6%. This would indicate that the construction industry is picking up since building permits are the first things needed before beginning construction.
Meanwhile, the Ivey report is expected to hop above the baseline score of 50 – scores above this figure indicate expansion whiles scores below it suggest contraction. The index is expected to have a reading of 52.4, up from January’s reading of 48.4. An uptick would indicate that Canadian business managers are becoming slightly more optimistic about the economy.
Commodity currencies wept over their losses as the US dollar bulls took the upper hand yesterday. Strong economic figures from the US pushed the USDCAD from the 1.0550 area above the 1.0600 handle. Canada didn’t release any economic reports, leaving the loonie vulnerable to greenback strength.
Today, Canada will release its building permits report at 1:30 pm GMT. It could show that building permits rebounded by 2.7% in December after sliding down by 4.6% in the previous month. Although this increase is feeble compared to the 18% rise seen last October, a better than expected figure could allow the loonie to recover from yesterday’s tumble.
Canada’s Ivey PMI is also due today. The report, which will be released at 3:00 pm GMT, could show that the manufacturing sector expanded in January. After sinking below the 50.0 mark in December, the indicator could post a recovery by climbing from 48.4 to 52.3.
The Loonie was not able to escape the greenback’s broad-based onslaught in yesterday’s trading. The USDCAD rose to 1.0727 from 1.0624.
Canada’ December building permits and the Ivey PMI in January both logged in less-than-stellar results. The country’s building permits fell short of the market’s 2.7% estimate with only a 2.4% gain. Similarly, the Ivey PMI was only able to reach 50.8, which is below the 52.3 consensus. These dismal results of course added some selling pressure on the Loonie. The selling, however, intensified more when the US’s initial jobless claims reached 480,000.
Later, Canada’s version of the employment report will be made public. The net change in employment for the month of January is seen to be at 15,200. The country’s jobless rate, however, is expected to remain the same at 8.5%. In any case, any increase in payrolls in Canada and in the US could give the Loonie a much needed lift.
Despite the strong case of risk aversion last week, the Loonie was able to keep its ground against the US dollar. The USDCAD was hardly changed, closing the week at 1.0701, a mere five pips lower from its week open price of 1.0706.
Canada’s strong employment situation report gave traders a reason to hold on to the Loonie. The report revealed that 43,000 net jobs were added in January, almost thrice the initial forecast of 15,200. Furthermore, the unemployment rate, which was expected to remain at 8.5%, fell to 8.3% instead. I’d be careful to read to much into the number though as digging deeper into the report would reveal that the boost came mostly from part-time work… 41,500 in fact.
First up this week is the report on housing starts. It is predicted to show that an annualized number of 180,000 homes began construction in January, slightly higher than the 175,000 figure seen the month before. The actual result will be released later today at 1:15 pm GMT. If the report comes out better-than-expected, we could see the USDCAD’s highest price level last week hold…
On Wednesday, Canada’s trade balance for the month of December is due. The trade balance measures the net difference in value between exported and imported goods. A positive balance is called a surplus, which means more goods were exported. On the other hand, a negative balance is called a deficit, which implies more goods were imported. The forecast for December is a deficit of 100 million CAD, down the 300 million CAD deficit seen the month before.
Poor Loonie! Despite some good economic data, the CAD was not able to make any headway against the dollar. Once again, the USDCAD trickled higher, closing out at 1.0746.
Housing data released yesterday indicated that the housing industry is improving in Canada, as the annualized rate of housing starts rose to 186,000. This marked the highest level in more than a year. However, with other recent data showing improvements in the housing sector, this has led to speculation that a new housing bubble could be forming. Is the housing sector benefiting from ultra low rates? Is it time for the Bank of Canada to start raising interest rates?
Not so fast, according to BOC deputy governor Pierre Duguay. In a speech yesterday, Duguay said that rates will remain at current levels at least until the middle of 2010. He said that a strong CAD is putting a drag on economic recovery. Well, with the CAD’s recent slide, it looks like BOC officials are getting exactly what they want.
Even though Canada didn’t release any economic reports yesterday, the CAD was able to make headway against the greenback as investors’ risk appetite improved. After lingering above the 1.0750 level for the past few days, the USDCAD dipped to a low of 1.0646 recently.
Canada is set to report its trade balance data at 1:30 pm GMT today. The report could show that the nation’s trade deficit narrowed from 0.3 billion CAD to 0.1 billion CAD in December. Also, watch out for the release of the US trade balance data, which could make way for a bumpy ride for the USDCAD. The US trade balance could also print a smaller deficit for December.
The Canadian Loonies scored another close win against the US Greenbacks in yesterday’s currency tourney. The USDCAD fell and settled at 1.0630 from 1.0679.
Canada’s negative trade balance remained the same at –C$0.2 billion in December. The consensus was only –C$0.1 billion. Economists say that low demand from the US plus the strong Canadian dollar has been putting a strain on the economy. The result, however, did not have much impact on the Loonie’s short term valuation. Still, it was able to end the US session on a positive note.
Later at 1:30 pm GMT, Canada’s new housing price index will be reported. The index is seen to post another 0.4% gain in December on top of the 0.4% rise during the month prior. The result, though, will most likely have an mild effect on the Loonie.
Despite the fresh wave of risk aversion, the Loonie was able to paddle to victory yesterday. Greece’s debt woes, the usual proponent of risk aversion lately, could be far from over now that EU officials have decided not to dole out direct aid to the ailing nation.
The rise in Canada’s new home prices was probably the reason why the Loonie was able to keep its head above water. New home prices rose for the sixth straight month in December, climbing by 0.4% on the heels of improving market conditions. Although house prices were still down by 0.9% from a year ago, concerns about a possible house price bubble started to form. However, plenty were reassured by Finance Minister Jim Flaherty’s statement saying that there was no evidence of home-buyers taking on unsustainable debt.
Today, we turn our attention to the automobile industry as Canada releases the new motor vehicle sales report for December. After sliding down by 6.0% in November, new automobile sales are expected to rebound by 2.0% in December. Even though this report is slated to have a minimal impact on the loonie’s price action, a stronger than expected figure could provide support for the currency.
Still, keep an eye out for the US retail sales report also due today. Would we see another disappointment this time? Could an upbeat report fuel risk appetite or would it spur more US dollar buying? Better stay tuned during the release of the actual figure at 1:30 pm GMT.
Woooo! Look at that Loonie go! The Canadian dollar made some impressive gains against the dollar last week, with the USDCAD pair dipping all the way down to 1.0516. Is this a sign that the CAD is back on track? Or will dollar bulls see this as an opportunity to buy the pair once again?
Over the next two days, manufacturing and wholesale sales will be available at 1:30 pm. Manufacturing sales are expected to have risen by 2.1% during the month of December. This would mark a steady improvement from November’s rise of just 0.1%. Meanwhile, wholesales sales are estimated to have grown by 0.6% in December, down from a rise of 2.5% increase in November.
Still, I have a feeling that those reports wont cause too much noise in the markets. Instead, I think traders will be gearing up for some inflation data due on Thursday. The consumer price index is projected to print a 0.3% rise in consumer goods during the month of January. Meanwhile, core CPI – which doesn’t include the 8 most volatile items – are expected to show a rise of 0.1%.
Take note that inflation is one of the more closely looked data that the BOC focuses in on when deciding upon interest rates. A spike in inflation could give reason for central bank officials to raise interest rates sooner than expected. And we all know what the prospect of a rate hike does for a currency – it gives traders a reason to buy it up!