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Lower oil prices and risk appetite did the Loonie damage last week. Can this week’s catalysts tempt market bulls into action?

BOC’s policy statement (Mar 4, 3:00 pm GMT)

  • Bank of Canada (BOC) maintained its interest rates at 1.75% as expected
  • What markets didn’t expect was for Governor Poloz to hint at a rate cut if the current economic slowdown persists
  • Analysts see the BOC maintaining its policies steady for another month in March
  • Watch the presser at 5:45 pm GMT to see how close BOC is to its first rate cut since July 2015

Labor market data (Mar 6, 1:30 pm GMT)

  • A net of 34,500 jobs were added in January, as 35,700 found full-time work while 1,200 lost part-time jobs. Analysts only saw a 15,000 increase
  • Unemployment rate edged lower from 5.6% to 5.5% for the month
  • The better-than-expected numbers boosted CAD against its major counterparts
  • Markets see an additional 10,000 net jobs increase in February
  • Unemployment rate could edge back up to 5.6%
  • The IVEY PMI, usually a leading indicator for the labor market, won’t be released until 3:00 pm GMT

Trade balance (Mar 6, 1:30 pm GMT)

  • Canada’s trade deficit narrowed from 1.2B CAD to 0.4B CAD in December, better than forecasts of a 0.6B CAD shortfall
  • Exports had risen by 1.9% thanks to a surge in crude oil sales, while imports inched 0.2% higher on consumer goods purchases
  • The report, along with positive risk sentiment, propped CAD higher across the board

OPEC meetings

  • Key members of the Organization of the Petroleum Exporting Countries (OPEC) are meeting in Vienna on Thursday and Friday and markets expect additional production cuts to be on the table
  • Word around is that Saudi Arabia is pushing for an additional cut of one million barrels per day
  • Inaction will likely inspire selloff of the Black Crack

Overall risk appetite

    • Updates on new Coronavirus cases will continue to affect the demand for high-yielding currencies like CAD
  • It’s also U.S. NFP week, which could direct focus on USD’s overall trends and retracements
  • Economic themes, such as PMI releases from other major economies, a “Super Tuesday” in the U.S., and Brexit trade negotiations can also affect overall risk-taking

Technical snapshot

  • Stochastic is flagging CAD’s “oversold” conditions against CHF, JPY, EUR, and USD on the daily time frame
  • CAD is nearly (but not quite) “overbought” against AUD and NZD

  • AUD/CAD, CAD/CHF, CAD/JPY, and NZD/CAD are all trading below their short AND long-term SMAs on the daily
  • EUR/CAD is trading above its short and long-term SMAs
  • GBP/CAD is trading above its 200 SMA but below its shorter-term SMAs
  • USD/CAD is a hair’s breadth away from trading above its short and long-term SMAs

Missed last week’s price action? Read CAD’s price recap for February 24 – 28!