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Canada won’t be printing top-tier reports this week. So what could move the Loonie’s prices? Here’s a short list.

Okay, it’s really a “list” of one:

Crude oil prices

After days of popping higher, crude oil prices have taken a breather in the past couple of trading sessions.

Late last week a “U.S. government official” hinted that the administration could grant exemptions to nations that are exerting enough effort to reduce their Iranian oil imports.

Meanwhile, in an interview last week Saudi Arabia’s crown prince Mohammed Bin Salman shared that “We export as much as two barrels for any barrel that disappeared from Iran recently.”

He also added that “…we did our job and more” in filling the supply gap that Iran’s sanctions – which are scheduled to take effect in November 4 – are creating.

Last but not the least, a survey recently printed by S&P Global Platts showed OPEC producers raising their output in September.

Will all these factors lead to lower oil prices over the next couple of days?

Last Week’s Price Review

The Loonie is mixed but a net winner (as of 5:00 pm GMT), so the Loonie is still on track for its fourth week of net wins.

The Loonie was actually the top-performing currency from Monday until Wednesday, thanks to NAFTA-related optimism and the rise in oil prices at the time.

However, the Loonie was forced to surrender a large chunk of its gains when oil prices slumped on Thursday. Also, the details of Canada’s jobs report failed to impress on Friday, so the Loonie found more sellers and was forced to surrender even more gains in the wake of Canada’s jobs report.

As for details, go ahead and read on.

Overlay of CAD Pairs & Crude Oil (Black Line): 1-Hour Forex Chart
Overlay of CAD Pairs & Crude Oil (Black Line): 1-Hour Forex Chart

Loonie pairs gapped higher across the board at the start of the week, thanks to rumors over the weekend that Canada and the U.S. have successfully negotiated NAFTA.

And as it later turned out, those rumors were true since U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland issued a joint statement confirming that a deal has been struck and that NAFTA will be renamed to the “United States-Mexico-Canada Agreement” or USMCA for short.

U.S. President Trump also chirped in and tweeted the following:

It also helped that oil prices surged during Monday’s U.S. session, with the renegotiated NAFTA deal and sanctions against Iran being cited as the reasons for the jump in oil prices.

The Loonie’s price action then became a bit more mixed come Tuesday, but it soon became clear that that most CAD pairs (except USD/CAD) were tracking oil prices on Wednesday.

And unfortunately for the Loonie oil prices tanked on Thursday, thanks to profit-taking because of rising expectations that Saudi Arabia and Russia may boost production, market analysts say.

The Loonie was able to hold its ground against the Swissy and the Greenback, though. Well, until Ivey’s PMI report came in weaker-than-expected, that is.

Fortunately for the Loonie, oil prices eventually found support, so CAD pairs also found support and began trading sideways.

However, fortune frowned on the Loonie come Friday, thanks to Canada’s jobs report.

You see, the Canadian economy generated +63.3K jobs in September, which is significantly more than the expected +25.0K. The Loonie therefore jumped higher as a knee-jerk reaction.

However, the details of the report showed that jobs growth was driven by the 80.2K increase in part-time jobs, while full-time jobs fell by 16.9K, so the Loonie quickly turned south.

And there was some follow-through selling on most pairs (except NZD/CAD and AUD/CAD), likely because wage growth was also rather disappointing since the average hourly wage rate only increased by 2.35% year-on-year, which is the weakest annual reading since September 2017.

Worse, the slowdown in wage growth was due mainly to weaker wage growth from full-time jobs since the average hourly wage rate for full-time jobs only increased by 1.96% year-on-year, which is the weakest reading since August 2017 and also marks the fourth consecutive month of ever weaker annual increases.

Anyhow, Thursday’s slump and Friday’s negative reaction to Canada’s jobs report were enough to erase the Loonie’s gains on some pairs, so the Loonie is now mixed (but still a net winner) after flying high at the top from Monday until Wednesday.