The Loonie was king of pips in last week’s trading as it extends its consecutive wins to week three. What’s in store for the comdoll this week?
CPI and retail sales
Though Canada is printing lower-tier reports throughout the week, the currency likely won’t see sustained, event-specific price action until Friday at 12:30 pm GMT when the inflation AND retail sales reports are released.
Last month’s releases didn’t really inspire confidence for the bulls. For one, both headline and core inflation readings missed analysts’ estimates. And though retail sales came in as markets had expected, February’s growth was also revised lower.
This week market bees are buzzing that retail sales could show a 0.1% dip after printing 0.4% growth in March, while headline consumer prices could maintain its 0.3% reading.
Are we in for more mixed to downside surprises? Make sure to keep close tabs on the newswires on Friday if you’re planning on opening and Loonie trades!
Updates on Iran’s nuclear deal
Will oil prices extend their rallies this week? Or will a lack of fresh headlines inspire some profit-taking?
This week pay close attention to how the markets react to any developments regarding Iran’s nuclear deal as well as any (positive?) news about the upcoming meeting between Donald Trump and Kim Jong Un.
Watch out for any headlines that could mean increased geopolitical conflicts in the oil-producing regions!
Last Week’s Price Review
The Loonie is flying high as the one currency to rule them all this week (as of 5:00 pm GMT), marking the third consecutive week of net wins for the Loonie.
Oil prices started surging on Tuesday, thanks to Trump’s announcement that he was leaving the Iran Deal. And as always, the Loonie was taking its marching orders mainly oil prices, so the Loonie also climbed higher after a wobbly start.
Other than oil prices, Canada’s economic reports may have also had an effect on the Loonie’s price action.
The Loonie, for example, kept on climbing higher on Wednesday even as the oil rally stalled for a while. And as noted in Wednesday’s U.S. session recap, that may have been due to the higher-than-expected reading for Canadian building permits (3.1% vs. 2.0% expected, -2.8% previous).
The Loonie’s bearish reaction to Canada’s poor jobs report on Friday is also another example since oil prices dipped but the Loonie didn’t go down until Canada’s jobs report was released.
As for specifics, the Canadian economy shed 1.1K jobs in April, which is a severe miss because the consensus was that 17.8K jobs would be generated.
Despite the loss of jobs, the jobless rate held steady at 5.8%, but that was because the labor force participation rate deteriorated from 65.5% to 65.4%.
Pretty bad so far, right? It does get a bit better since full-time employment actually grew by 28.8K. It just so happens that 30K part-time jobs got axed.
Also, average hourly wages grew by 3.6% year-on-year in April, which is the strongest annual increase since August 2012 and marks the fourth consecutive month of stronger annual readings to boot.
Overall, Canada’s jobs report was actually mixed. And that’s probably why the Loonie’s bearish reaction to the jobs report wasn’t really that strong.