Looks like the Loonie traded on its counterparts’ price action for another week last week. Will this week’s reports give the Loonie its own direction?
Lower-tier economic reports
If you’re looking for a big catalyst to set the Loonie apart, then this week is not your week.
In fact, Canada won’t print any economic data until Thursday 1:30 pm GMT when it releases the ADP non-farm employment change, which doesn’t usually affect the Loonie’s price action for long.
The next (and last) reports for the week are the manufacturing sales and foreign securities purchase due on Friday at 1:30 pm GMT.
Though they don’t usually cause sustained trends for the Loonie, they might be good for a couple of candlesticks that you can take advantage of.
General risk sentiment
Since Canada won’t be printing a lot of economic reports and the Loonie danced to the tune of its counterparts’ price action, it might be worth your while to watch catalysts that might affect risk sentiment instead.
Read the other major currencies’ potential catalysts to see which ones will most likely move the markets (and the Loonie)!
Last Week’s Price Review
The Loonie had a mixed performance this week. And its price action is just as mixed, as you can see below.
As you can also see, the Loonie didn’t really track oil prices that much. Moreover, there are plenty of diverging price action, which means that the Loonie was vulnerable to opposing currency price action yet again.
This marks the fourth consecutive week that the Loonie’s price action has been a chaotic mess. The last time the Loonie showed uniform price action was during the January 8-12 trading week, which is when NAFTA-related fears hammered the Loonie.
Anyhow, there were top-tier reports for the Loonie this past week, namely Canada’s trade report and jobs report.
Canada’s December trade report disappointed because Canada’s trade deficit was revealed to have widened from C$2.7 billionto C$3.2 billion instead of narrowing to C$2.3 billion, thanks to 1.5% gain in imports far outpacing the 0.6% increase in exports.
However, the trade report didn’t really have a uniform effect on the Loonie’s price action.
As for Canada’s January jobs report, that printed a massive loss of 88.0K job, which is far more than the expected 2.0K loss and it the biggest loss since January 2009 to boot. As such, the Loonie tanked hard across the board as a knee-jerk reaction.
However a closer look at the details of the report shows that full-time employment actually surged by a solid 49K. However, this was overshadowed by the massive loss of 137K part-time jobs.
Moreover, wages grew by 0.56% in January, accelerating from December’s +0.23% and marking the sixth consecutive month of positive wage growth. Year-on-year, wages grew by 3.31%, which is the strongest rate of annual growth since March 2016.
And these upbeat readings for wage growth, as well as the continuing rise in full-time work, likely removed some of the bitter taste from the jobs report, allowing the Loonie to lick its wounds.