Looks like the Loonie took cues from both risk sentiment and Canadian data last week. Will the same thing happen again this week? Here are potential catalysts.
Monthly GDP report (Mar 2, 1:30 pm GMT)
Loonie pairs showed limited reaction to last month’s release because (a) the report came in at 0.4% as expected in November, and (b) traders were too busy trading the FOMC statement event to pay attention to a lagging monthly reading.
This time around market players expect Canada’s GDP to slow down from 0.4% to 0.1% in December. There are no other top-tier reports on tap during the trading session, so there’s a bigger chance that the Loonie will react to the event.
Oil price movements
As mentioned below, the Canadian dollar also took cues from Black Gold price action last week.
Watch out for the Energy Information Administration (EIA)’s weekly crude oil inventories report on Wednesday at 3:30 pm GMT to see if it prints another surprise draw that would push prices higher.
Of course, pay attention to overall risk sentiment, too. Specifically, demand for the dollar – oil’s funding currency – can also affect demand for crude oil (and the Loonie).
Last Week’s Price Review
The Loonie was a net loser earlier during the day, but is now on on course to closing the week a bit mixed (as of 6:00 pm GMT).
Despite the mixed performance, the Loonie wasn’t a pushover that just took orders from opposing currencies since price action on the Loonie was actually uniform, especially on Thursday and Friday.
Admittedly, however, price action on the Loonie from Monday to Wednesday was a bit more mixed. Most Loonie pairs were slightly tilting to the downside, though, likely because oil prices were also in decline.
Anyhow, what happened on Thursday and Friday? Well, as marked in the overlay of CAD pairs above, Canada’s retail sales report was released on Thursday and that happened to be a big miss, causing the Loonie to tank even as oil prices surged.
As for Friday, well, the Loonie was apparently tracking the rise in oil prices for the most part. However, Canada’s CPI report also surprised to the upside by printing a 0.7% month-on-month increase (+0.4% expected), which jolted the Loonie higher across the board.