Loonie bulls lost their mojo last week because of geopolitical issues. Can this week’s events inspire recoveries for the comdoll?
IVEY PMI (Aug 7, 3:00 pm GMT)
Last month’s release told us that purchasing activity in Canada had slowed to a four-month low in June. Turned out, it was weaker supplier deliveries and employment measures that had weighed on the index.
Luckily for Loonie bulls, the IVEY PMI release was printed at the same time as the labor market numbers that inspired rallies for the comdoll. The Loonie ended the day higher against most of its counterparts.
This week analysts see the purchasing index improving from 52.4 to 52.7 in July.
Take note that there aren’t any top-tier reports scheduled around the IVEY PMI’s release. That means that, unless there are significant geopolitical updates during the trading session, Loonie traders can take their cues from the IVEY PMI report.
Labor market data (Aug 9, 1:30 pm GMT)
Canada’s economy lost a net of 2,200 jobs in June, much weaker than the 27,700 net jobs created in May and the 10,000 gain that analysts had expected.
Unemployment rate didn’t look much better with its jump from 5.4% to 5.5% for the month. Fortunately, a closer look showed full-time jobs rising by 24,100 even as 26,200 part-time workers had lost jobs.
While the headline numbers weighed on the Loonie against the dollar, the comdoll also gained pips against its other counterparts as traders focused on the strong gains in the labor market since the start of the year.
This Friday market players are expecting Canada to add a net 12,500 jobs in July. The unemployment and participation rates are estimated to maintain their 5.5% and 65.7% readings, however.
A strong labor market is one of the reasons why the Bank of Canada (BOC) can take a chill pill with its monetary policies while its neighbors are cutting rates left and right.
If we see significant weaknesses in this week’s numbers, then the central bank could face pressure to ease their policies alongside other commodity-related economies.
Missed last week’s price action? Read CAD’s price recap for July 29 – August 2!