The Loonie shrugged off lower oil prices and a weak Canadian GDP reading to grab one of the top spots last week. Let’s see if this week’s catalysts can change its course!
Trade balance (April 5, 12:30 pm GMT)
Canada’s trade deficit narrowed down from 3.1B CAD to 1.9B CAD in January thanks to a sharper decline in imports compared to the exports’ declines.
Traders mostly ignored the report, however, since all eyes were on the BOC’s relatively upbeat statement as well as the possibility that Canada and Mexico will be exempted from Trump’s aluminum and steel imports (and they were, at least for 30 days).
This time around analysts are looking for the deficit to widen to 2.1B CAD. A significantly weaker report could weigh on the Loonie, while an upside surprise could extend the comdoll’s intraweek gains.
Employment numbers (April 6, 12:30 pm GMT)
Uncle Sam isn’t the only one printing labour market numbers this week!
In last month’s release we saw Canada’s jobless rate falling from 5.9% to 5.8% in February. Not only that, but a net of 15,400 workers had found jobs, with 54,700 additional part-time work offsetting the 39,300 full-time jobs lost.
Though the headline numbers still missed analysts’ estimates, the Loonie’s intraweek trend was strong enough to sustain its momentum until the end of the week.
This week market players are expecting to see a net of 20,300 jobs created in March, with the unemployment rate is expected to remain at 5.8%.
Remember that the report is scheduled at the same time as the U.S. NFP, so y’all better make sure you got your trading plans prepared before you trade a volatile event like this!
Global trade war concerns
A few hours earlier we learned that China has already imposed additional tariffs on U.S. a bunch of U.S. products. If the global trade war theme gains traction, then we might see export-dependent economies like Canada’s take a few hits.
Stay glued to the tube for headlines that could affect the Loonie’s price action!
Last Week’s Price Review
The Loonie is one of the top-performing currency of the past week, which marks the second week of net wins for the Loonie, even though oil was down for the week.
Oil was down for the week, thanks to the unexpected build-up in U.S. oil inventories, market analysts say.
And while the Loonie did take some directional cues from oil on Monday and Thursday, there was a glaring divergence between oil prices and CAD pairs on Tuesday on Wednesday since oil was getting bashed by sellers while the Loonie was tilting broadly to the upside.
What’s up with that? What caused the Loonie to part ways with oil? Well, there weren’t really any direct catalysts, but some market analysts said that easing fears of a potential trade war between China and the U.S. supposedly raised expectations that BOC would be more open to another hike.
That does sound plausible. After all, Canada’s latest CPI report did impress last week. Also, it probably helped that recent NAFTA-related talks between Canada and the U.S. were relatively positive (or not disappointing at the least). Although there were also negative rumors floating about near the end of the week.
As a side note, Canada’s monthly GDP reading failed to meet expectations (-0.1% vs. 0.1% expected). However, that only caused the Loonie to wobble a bit, apparently because the Loonie was tracking oil prices again after decoupling for a while.