Light on Canadian economic data and flowing with global risk sentiment, the Loonie managed with mostly wins on subdued volatility.
Major Market Drivers for the Canadian Dollar
With a lack of any economic data or market moving headlines from Canada, it’s likely the choppy start to the week for the Loonie was influenced by global risk-on sentiment, mainly China related headlines (the former on China’s slowdown in exports before strength on improving U.S.-China trade developments).
Eventually, bullish traction began to pick up mid-week, most likely on a combination of the continued positive vibes in global risk sentiment, but possibly on the rally in oil prices, likely lifted by the same bullish risk sentiment and headlines that OPEC slashed production in December in an effort to prevent oversupply in the global oil markets.
Mid-week is also about the time where price action started to diverge between Loonie pairs as counter currency influence began to take focus (e.g., post Brexit vote rally in GBP, housing fears induced Kiwi weakness, and broad USD strength on U.S.-China trade developments).
Finally, it was U.S.-China trade-related headlines (WSJ report on the U.S. possibly lifting tariffs on Thursday, then the offer from China to reduce trade imbalances on Friday) and another OPEC report on monthly output declines that likely had traders bidding up both the Loonie and oil prices heading into the weekend.
Canadian Headlines and Economic data
- Canada home prices fall for 3rd straight month in December
- ADP non-farm employment change -13K vs 74k previous
- Canada Inflation Unexpectedly Accelerated in December
- Canada’s international transactions in securities rises to $9.5 in November