Top-tier reports and oil price action moved the Loonie last week. Will we see the same catalysts affect the comdoll this week?
Here’s a list of the potential market-movers:
Monthly GDP report (Sept. 28, 12:30 pm GMT)
Canada’s latest GDP report failed to impress, as it clocked in a flat quarterly growth when analysts had expected a 0.1% uptick.
Luckily, the annualized reading still reached 2.9%, which missed the expected 3.1% increase but is still higher than Q1’s 1.4% growth.
Analysts also considered that though exports jumped during the quarter, a slowdown in business investment could weigh on the economy in the foreseeable future.
This week market geeks expect to see a 0.1% monthly increase in July. A weaker-than-expected reading could make investors jittery as it hints that the economy is already weakening even before the U.S. goes on a full-on trade war against Canada.
Oil price action
One of the biggest stories over the weekend was OPEC (and friends) not bowing down to pressure from the POTUS to increase oil production to help bring down oil prices.
In a Joint Ministerial Monitoring Committee (JMMC) meeting in Algiers on Sunday, Saudi Oil Minister Khalid al Falih hinted that the group is more interested in balancing supply and demand for the commodity.
How will the Donald react to OPEC’s decision? More importantly, will oil traders extend this week’s uptrend or will they use whatever Trump says to force retracements and reversals?
Watch your newswires closely, folks!
Last Week’s Price Review
The Loonie is mixed but a net winner for the week (as of 5:00 pm GMT). That’s a disappointing performance considering that the Loonie finished in second place last week. Still, that does mean that Loonie will soon be marking its second week of net wins.
See? The only time the Loonie didn’t really track oil prices too closely was on Friday.
Anyhow, market analysts say that oil prices were on a tear this week because of lower U.S. oil inventories, higher demand for gasoline, and expectations that OPEC will not raise oil output in this Sunday’s OPEC meeting.
Aside from oil prices, the Loonie also reacted positively to Canada’s manufacturing sales report since the Loonie just kept on marching higher even as oil prices pulled back.
Sure, the 0.9% month-on-month increase in July failed to meet the +1.0% consensus, however market analysts pointed out that the report helped to push odds for an October BOC rate hike up to 80%.
Sadly for the Loonie, oil prices slumped hard on Thursday, apparently as a reaction to this tweet from Trump.
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
— Donald J. Trump (@realDonaldTrump) September 20, 2018
Oil prices began turning higher again come Friday, but most CAD pairs were range-bound, probably because traders were bracing themselves for Canada’s CPI and retail sales report.
And as it later turned out, Canada’s CPI report revealed that the monthly and annual headline readings were both within expectations, but all of the BOC’s preferred measures for the core reading ticked higher, so the CPI report was actually good overall.
Canada’s retail sales report, meanwhile, revealed that the headline reading was within expectations, but the core reading came in at +0.9%, soundly beating expectations for a 0.6% increase. And the core reading surprised to the upside because 8 of the 11 retail store types reported higher sales.
And since both the CPI report and retail sales report were positive, the Loonie tried to fly higher.
However, the Loonie’s wings got clipped, thanks to these negative (for Canada) NAFTA-related comments from White House Economic Adviser Kevin Hassett:
“We’re still talking to Canada, and we’re getting very very close to the deadline where we’re going to have to move ahead with Mexico all by themselves.”
“I’m a little surprised that the Canadians haven’t signed up yet.”
“I worry that politics in Canada is trumping common sense because there’s a very good deal that was designed by Mexico and the U.S. to appeal to Canada. And they’re not signing up and it’s got everybody over here a little bit puzzled.”