The loonie bowed down to the greenback last Friday as Canada’s CPI failed to meet expectations, marking its longest streak in declines since 1953. This week, the loonie gears up for some volatility ahead of the BOC rate statement.
Price levels held steady in September, bringing Canada’s annualized CPI down to -0.9%. This marks the fourth straight month in declines for the indicator. Meanwhile, core CPI rose by 0.3%, indicating that prices of volatile items, such as gasoline, accounted for much of the drop in CPI.
The inflation reports set the stage for the BOC interest rate decision on Tuesday. Analysts say that the absence of strong inflation pressures effectively rules out the possibility of a rate hike for this month. In fact, the central bank is expected to hold rates at 0.25% until June 2010. Recall that BOC Governor Mark Carney previously said that he will keep rates at their current level until annual inflation returns to the central bank’s 2% target.
Today, data on foreign securities purchases is due 12:30 pm GMT. Net purchases of Canadian securities are expected to rise from 0.35 billion CAD to 2.97 billion CAD in August.
On Tuesday, Canada’s leading index of indicators is set for release. It is expected to climb by another 1% this September. Data on wholesale sales is also due on Tuesday and is expected to slide down by 0.4% after surging by 2.8% in the previous month.
Retail sales reports are due on Thursday and this should be another high-impact release for the loonie. Sales at the retail level are expected to climb by 0.2% in September, a slight bounce from August’s 0.6% drop. Core retail sales are projected to be up by 0.5%.
The USDCAD’s rally was cut short as the Loonie reasserted itself back in yesterday’s price action. The pair fell to a low of 1.0281 before closing at 1.0292. The pair could move lower given the fact that it already closed below the psychological 1.0300 support.
Canada’s foreign securities purchases, which measures the total value of domestic stocks, bonds, and money-market assets purchased by foreigners during the reported month, surged to C$5.08 billion (C$2.97 billion consensus) after seeing it fall to C$0.37 billion last month. An expansion in the account indicates a consequent rise in capital inflows to Canada. Such is bullish for the CAD since investors need it to acquire the mentioned assets.
In the mean time, data on Canada’s wholesale sales for the month of August and the country’s leading index in September will be released today at 12:30 pm GMT. Wholesale sales are seen to have decreased by -0.4% after gaining by 2.8% in July. Meanwhile, Canada’s leading index is projected to taper to 0.9% from 1.1%.
Much weight, however, will be given to today’s interest rate decision at 1:00 pm GMT. The BOC is expected to leave its rate unchanged at 0.25%. Though, market participants will tune in more to its statements regarding its future policies. Previously, the bank stated that it would continue with the same rate until the end of the second quarter of 2010. However, there are some speculations that the bank could hike its rate as soon as expected given the improvement in its economy particularly in its housing industry. Any indication of such could further boost the Loonie which unfortunately could hurt Canada’s huge export industry. This is why BOC Governor Mark Carney is left at a quandary about the bank’s policies.
The Loonie experienced a serious butt-kicking yesterday when the Bank of Canada commented on its strength. The USD/CAD was trading at the 1.0320-1.0340 price range prior the BoC’s announcement and just surged almost 200 pips after.
The BoC, in its statement, said that they would keep interest rates steady as promised for this month at 0.25% and would remain low until June 2010. What really triggered the Loonie-selling frenzy was the BoC’s comment that the currency’s strength would eventually undo all the economic improvements seen in July. As a country with a robust export industry, Canada wants to keep its currency cheap to make sure that its exports are attractive to importers.
Meanwhile, economic data that came out of Canada was mixed. The leading index for September, which is a combined reading of ten economic indicators designed to predict the direction of the country’s economy, printed 1.1%, higher than the 0.9% expected. On the other hand, wholesale sales fell by 1.4% in August. The forecast was only a 0.4% drop.
No economic data today but we will see if the Loonie would continue its sell-off tomorrow since the August retail sales report and the BoC monetary policy report are due.
During the earlier sessions, it looked like the Loonie was about to get another beating, but decided to fight back and actually won yesterday’s trading round. The USDCAD pair went as high as 1.0584, zooming down to close at 1.0458.
We could see a lot more movement in CAD trading today as retail sales data will be available at 12:30 am GMT. Retail sales is expected to pick up by 0.3% during the month of August, while core retail sales is projected to have risen by 0.5%.
Also, later at 2:30 pm GMT, the Bank of Canada will be releasing its monetary policy report. This could provide more insight as to why the BOC wants to keep rates low until June 2010.
Given the high impact nature of these reports, they could provide more direction for the USDCAD, which has been going through roller coaster-like moves the past couple of days.
The USDCAD was unable to decide which direction to take yesterday as it bounced up and down from the 1.0450 and 1.0530 levels. Economic data from Canada was on the optimistic side as retail sales came in better than expected. However, the CAD returned its gains as BOC Governor Mark Carney hinted that the BOC would curb the CAD strength if it continues to rise and hurt their economy.
Canadian retail sales were up by 0.8%, beating the consensus of a 0.3% rise, as higher sales in gasoline stations and car dealers surged. Analysts mentioned that job gains in the recent months have boosted consumer confidence and encouraged them to pump up their spending. Core retail sales rose by 0.5% as expected.
The CAD fell against the USD during the BOC press conference when Carney mentioned that the CAD’s recent appreciation is impeding recovery in the Canadian economy. According to him, this undermines the central bank’s efforts to push inflation back to their 2% target. He said that the BOC wouldn’t hesitate to utilize their range of tools to prevent their local currency from rising.
Canada has no economic reports due today. Negative sentiment for the CAD could continue to affect the USDCAD’s price action this Friday unless US earnings reports or existing home sales data trigger a run of risk appetite. Be careful out there!
The Loonie wrapped last week on a weak note versus the dollar due to a broad-based decline in the US capitals markets. The USDCAD climbed to 1.0545 before closing at 1.0518.
Existing home sales in the US came in better-than-expected at 5.57 million units versus the 5.37 million initial estimate. Despite this, the equities markets together with the higher yielding currencies still tumbled perhaps due to some profit taking actions.
Meanwhile, Bank of Canada Governor Mark Carney is set to deliver a speech entitled “The Future of Financial Regulation” today at 1:00 pm GMT at the L’Autorité des marchés financiers, in Montreal. He’ll also issue another statement together with Senior Deputy Governor Paul Jenkins, about the bank’s MPC report before the Standing Committee on Finance, in Ottawa tomorrow. Just recently, the BOC decided to keep its monetary policies unchanged as they are. During his talks, market participants will probably look deeper into the matter regarding Canada’s economic situation and for clues about the BOC’s possible future monetary policy actions.
The highlight of this week, though, will be the release of Canada’s m/m GDP in August. Canada’s GDP, which will be published on October 30, is seen to gain by 0.1% in August after staying flat at 0.0% in July. An expansion in Canada’s economy would likely benefit the CAD at least in the short term.
The USD/CAD moved higher again yesterday as the Bank of Canada’s complaints about the CAD’s “persistent strength” continues to weigh down heavily on the minds of investors. The USD/CAD opened the week at 1.0523 and closed the US session yesterday more than 150 pips higher at 1.0691.
No economic release from Canada today but do expect a talk by Bank of Canada Governor Mark Carney at 2:00 pm GMT. He is set to testify about the bank’s monetary policy before the Standing Committee on Finance. The talk could prove to be very important to investors as the CAD experienced a massive sell-off in the most recent BoC interest rate decision. If Carney starts talking down the CAD again, we might see another round of selling later!
After getting whacked across the face the previous day, the CAD got some revenge yesterday, as it gained against the USD. The USDCAD pair ultimately closed lower at 1.0647. Still, given the relatively tight trading that occurred, could we be in line for a big splash today?
Yesterday, Bank of Canada Governor Mark Carney delivered a speech before the House of Commons Standing Committee on Finance. In his speech, Carney talked about the latest monetary policy committee meeting, pinpointing that the Canadian economy was slowly improving although some obstacles to recovery still remain. Once again, Carney mentioned that the strong appreciation of the CAD would slow down growth. If the CAD continues to make ground in the coming weeks, could the BOC make an actual move to counter this? Currency intervention anyone?
Carney will once again be speaking tonight at 8:00 pm GMT, this time in front of the Standing Senate Committee on Banking, Trade and Commerce. He will once again be talking about the recent monetary policy report. Watch out for any new developments, as traders will be listening to his every word.
Strong buying pressure pushed the USDCAD to bust out of consolidation and break above the 1.0700 mark. Risk aversion which resulted from a weak US economic reports, combined with BOC Governor Mark Carney’s comments against CAD strength, carried the USDCAD all the way up to a high of 1.0814.
In his speech yesterday, Carney reiterated that conditions in the Canadian economy have improved but the major challenges to recovery remain. One of these, according to him, was the heightened volatility and strength of their local currency. He expects that the recent appreciation of the CAD would impede growth, subdue inflation, and offset the impact of their easing policies. He then announced that the central bank expects the Canadian economy to contract by 2.4% this year and grow by 3.0% in 2010.
For today, Canada has a couple of minor inflation indicators on tap. These are the raw materials price index and industrial product price index. Both are expected to post declines in September, indicating that the strong CAD is indeed putting downward pressure on inflation. These reports are due 12:30 pm GMT.
The US third quarter GDP reading, which is also at 12:30 pm GMT, should have a larger market impact than the inflation reports from Canada. The report is expected to print 3.2% in economic growth for the third quarter after posting a 0.7% contraction in the second quarter. If the actual reading fails to hit the mark, risk aversion could push the USDCAD even higher.
Canada
The Loonie got its spark back when the US economy showed a 3.5% expansion during the third quarter. The USDCAD pair retraced down to 1.0655 before closing at 1.0665.
No top tier economic event happened in Canada yesterday. What drove the Loonie was the better-than- expected 3Q GDP report in the US. The economy was initially thought to have expanded by only 3.2%. Still, a lot of market participants doubted the rather optimistic figure when they stayed in the sidelines the day before the report. To everyone’s amazement, the economy even grew by a larger pace of 3.5%. Risk appetite surfaced once again which led to a broad–based buying of higher yielding assets like the CAD.
Today, Canada will take cue when it publishes it m/m GDP in August. Canada’s economy is seen to have grown by 0.1% in the month after staying flat in July. The CAD could get some additional support given a positive growth in the economy.
The Loonie fell flat on its face last Friday, reversing all of its gains from the day before. The decline in the Loonie’s value was caused by the usual suspect – risk aversion.
Instead of showing growth like expected, Canada’s GDP report showed that the country’s economy shrunk by 0.1%, indicating that recovery is very fragile as stimulus programs all over the world are starting to expire. A US report also showed that personal spending declined much more than expected (-0.5$ vs. -0.4%).
There are several important reports to watch out for this week.
First, there’s the September building permits report on Thursday. Investors tend to see a rise in building permits as a sign for future growth in the construction industry. The forecast is 1.3% increase in permits September-on-August.
Also on Tuesday is the Ivey PMI for October. The Ivey PMI is a survey designed to assess whether the Canadian businesses are growing or shrinking. Economists estimate a reading of 60.9, which is slightly lower than September’s reading of 61.7. If forecast holds, it means that businesses expanded.
Finally, watch out for the report on Canada’s labor market on Friday. The prediction is that joblessness remained steady at 8.4% in October and that 10,900 net jobs were created. Even if it is a lagging indicator, the report on the country’s labor market is usually a big deal for investors as it could confirm whether the economy is indeed starting to recovery.
Loonie action was loony yesterday, as trading was mixed. The USDCAD went up and down, before closing slightly lower at 1.0780. With not no data coming out today, could we see more of the same?
Tomorrow, Bank of Canada Deputy Governor John Murray will be talking about Canada’s economic stimulus plans. This could provide more direction for CAD trading, so watch out for any comments made during his speech. Remember, the CAD has been under some pressure as of late as BOC officials are expressing more and more concern regarding the strength of the Loonie. I wouldn’t be surprised if Murray attempts to talk down the CAD once again.
The Loonie seemed uneasy yesterday as it kept shifting its stance against the Greenback. Economic data from Canada and the US was scarce, which is probably why the USDCAD was unable to take a clear direction.
Today, Canada’s economic calendar is still report-free but watch out for that speech by BOC Deputy Governor John Murray. Recall that the BOC has already expressed its concerns against the strength of the Loonie. Would Murray talk down the Loonie or is his speech slated to be a non-event? We’ll find out around 1:00 pm GMT.
Keep in mind that high-impact economic reports from the US, namely the ADP non-farm employment change and the ISM non-manufacturing PMI, plus the release of the FOMC statement are likely to cause more volatility during the US session.
The Loonie is 3-up this week against the dollar, paring some of its losses last week. Yesterday, the USDCAD fell to a low of 1.0595 before closing at 1.0637.
Market participants focused more on the Fed’s interest rate decision yesterday. As expected, the Fed decided to keep its interest rate unchanged at 0.25%. It also said that it will hold it as is for an extended period until the economy shows more signs of recovery. The action is bearish for the USD which goes to the benefit of the other higher yielding currencies like the CAD. The 1.0% gain in oil prices also helped buoy the Loonie. Oil settled at $80.36/barrel after yesterday’s trading.
Data on Canada’s building permits and Ivey PMI will be published today. Building permits, which is expected to rise by 1.4% in September after surging by 7.2% during the month prior, will be released at 1:30 pm GMT. The Ivey PMI, however, is seen to decline to 60.1 in October from 61.7. The account will be made public at 3:00 pm GMT. We could see a mixed CAD trading given these expectations in the upcoming accounts.
Despite better-than-expected results from economic data released, the Loonie maintained its sideward movement for the second day yesterday as traders sit on the sidelines and await the results of the upcoming US NFP report.
The building permits report for September, which is used as a [leading indicator](http://www.babypips.com/forexpedia/Leading_indicator) for upcoming constructing activity, grew 1.6%, slightly higher than the 1.4% consensus. Residential permits, which make up a significant chunk of building permits, rose a whopping 9.4% indicating improving consumer demand for housing.
The Ivey PMI for October released yesterday also shared the same optimistic tone as it printed a reading of 61.2, much better than the 60.1 expected. However, it was slightly lower than September’s 61.7 reading. The Ivey PMI is a survey which tries to assess whether industries are expanding or not through the use of a 0-100 boom/bust scale. A reading above 50 indicates expansion.
On deck today at 12:00 pm GMT is the report on Canada’s labor market. The estimate is that 10,000 net jobs were added in October. Still, joblessness is expected to have risen to 8.5% from 8.4% indicating that not enough jobs are being created.
Also watch out for the NFP report coming out of the US today as it could provide the spark the Loonie needs to break out of its 80-pip trading range.
The Loonie got hit by poor employment data from both the US and Canada. This pushed USDCAD much higher to end the week, leaving the pair to close at 1.0752.
The Canadian economy lost 43,200 jobs in October, bringing the unemployment rate back up to 8.6%. This was disappointing, as it was expected that 10,000 jobs would be added after there was a net positive gain in employment the past two months. Furthermore, this run of job losses erased all the gains made during the previous month. If employment continues to be unstable, could this keep the Bank of Canada from withdrawing stimulus sooner?
Tonight, some housing data will be available as the housing starts report will be released at 1:15 pm GMT. The report – which measures the annualized rate of new homes that started being built last month – is expected to show that the rate increased to 157,000, up from 150,000 the previous two months.
No data on deck until Friday, when trade balance figures are due. After all the high impact data last week, could we be in line for some ranging this week before the report comes out? We shall see!
Thanks to USD weakness, the USDCAD tumbled below the psychological 1.0600 mark and reached an intraday low of 1.0555. The pair edged even lower as the CAD drew strength from the rise in commodity prices and the improvement in Canada’s housing starts.
October housing starts stood at 157K, marking its highest level since January this year. Construction of new multiple-family buildings offset the decline in single-home starts, according to Canada Mortgage and Housing Corporation. Rising commodity prices also boosted the CAD as oil prices rose by 2.4%.
Canada has no economic reports due in the next 24 hours, which means that the USDCAD could carry on from yesterday’s price action. The US economic calendar is free from high-impact reports as well.
The CAD moved sideways for the most part of yesterday before making a late push to close higher than the USD. The USDCAD pair fell to a low of 1.0488 but closed at 1.0500.
There was no notable economic event in Canada and in the US yesterday. The markets were mixed and so was the USDCAD. As mentioned, the pair was virtually range bound before closing lower at 1.0488.
Both Canada and the US will have a bank holiday today. Therefore, trading of the Loonie will most likely be light and range bound again.
Canada’s bare economic calendar wasn’t able to keep USD/CAD bears at bay yesterday as the pair managed to edge lower. It opened Asia with its head a few pips above 1.0500 and fell as the European trading session rolled along, eventually closing the day at 1.0460.
On the economic cupboard today is Canada’s [New Housing Price Index](http://www.babypips.com/forexpedia/New_Housing_Price_Index_-_Canada)(NHPI) at 1:30 pm GMT. The consensus is a 0.2% rise in price in September, up from the 0.1% increase seen in August. Traders use it as an indicator of future housing activity. Higher prices tend to draw businessmen into investing in Canada’s housing industry. However, the previous NHPI releases had little effect on price action so don’t expect this report to be any different.
Risk sentiment would most likely be the key factor in today’s trading session again, especially since Aussie, a commodity-based currency just like the Loonie, rallied on better-than-expected employment data. If this kind of sentiment persists throughout the day, the Loonie could find itself one notch closer to [parity](http://www.babypips.com/forexpedia/Parity).
The CAD loosened its grip on the USD yesterday, allowing the USD to recover after all its losses this past week. Loonie trading retraced a bit to close at 1.0561. The question is, will this continue today? Or will CAD buyers see this as an opportunity to jump back in?
It seemed that dollar buying was the theme for yesterday, as the CAD couldn’t benefit from an upside surprise from the New Housing Price Index. The index printed that housing prices rose by 0.5%, more than the expected 0.2% increase. It marked the largest uptick in home prices in 20 months. It seems that those low interest rate are working out…
We’ve got some trade balance data on deck later tonight at 1:30 pm GMT. Forecasts are that the deficit shrunk to 1.6 billion CAD, down from September’s figure of 2.0 billion CAD. If this does come in line with expectations, this could boost sentiment towards the CAD. It would highlight that exports are picking up. Given that the US is Canada’s major trading partner, it could signal that demand is rising in the US...