A lack of fireworks over NAFTA talks and oil prices left the Canadian dollar vulnerable to its peers last week. Will this week’s top-tier events keep the focus on the Loonie?
Trade balance report (Feb 6)
Tomorrow at 1:30 PM GMT we’ll see if Canada sports better trade numbers compared to last month. If you recall, a 5.8% growth in imports eclipsed a 3.7% uptick in exports and helped widen the trade deficit from 1.6B CAD to 2.5B CAD.
This time around market players are expecting the deficit to tighten to 2.3B CAD. The report didn’t get much attention last time since it was printed at the same time as Canada and the U.S. jobs numbers, but maybe we’ll get more reaction from Loonie traders this week.
Canada’s jobs data (Feb 9)
Unlike the retail sales report, Canada’s jobs numbers got a lot of attention. And why not?
The Great White North added a net of 78,000 jobs in December when only a 2,000 growth was expected. What’s more, a chunk of those were actually full-time positions! This lowered unemployment rate from 5.9% to 5.7% which marks a 41-year low.
On Friday at 1:30 PM GMT analysts are expecting to see a bit of pullback. Unemployment rate is expected to rise to 5.8% while a net of 2,000 workers is expected to lose their jobs.
An upside surprise would give another boost to the Loonie, so y’all better keep your eyes glued to the tube for the event!
Last Week’s Price Review
As has been the case in the past few weeks, the Loonie’s price action this week was yet another chaotic mess, with lots and lots of diverging price action, which shows just how vulnerable the Loonie was to its peers.
And as usual, the likely reason why the Loonie hasn’t been tracking oil prices and has been lacking direction lately is that there’s still a lot of NAFTA-related uncertainty.
As for some NAFTA-related updates, the sixth round of talks came to end but was relatively fruitless (yet again). The next round of talks are expected to start on February 26.
And while the U.S. shot down Canada’s proposals, U.S. Trade Representative Robert Lighthizer said that he is working “very hard” toward “major breakthroughs” by the time the next round of talks start.
And market analysts say that’s a sign that the U.S. is now less likely to pull out of NAFTA talks. However, progress has been very slow, so uncertainty still remains.