Risk sentiment and counter currency themes were the main drivers for CAD, with a couple of weak data points from Canada to put pressure on the Loonie for most of the week.
Major Market Drivers for the Canadian Dollar
Canadian dollar pairs generally moved with the ebb and flow of global risk sentiment, which started off the week in a bearish mood after we saw China its slowest GDP growth rate since 1990. This sent risk assets lower, including oil, which was down as much as -3.0% on the week going into the close of the Tuesday trading session.
This was followed by mostly weak economic reports from around the globe, including weak sales in manufacturing and retail from Canada (-1.4% and -0.6% respectively and both worse-than-expected), as well as negative geopolitical headlines as the U.S. cancels its trade planning meeting with China.
It wasn’t until Thursday that we got a shift in global risk sentiment, arguably starting on positive earnings from U.S. tech companies earnings data and a dovish ECB, and traders really picked up the risk-on gears on Friday, possibly on the idea that the Fed may be close to ending its balance sheet reduction policy and fresh news that there was a deal made for a temporary end to the U.S. government shutdown. Most Loonie pairs and oil prices managed to creep back above or close to breakeven for the week, with exception to the Kiwi and Sterling of course, who both had a stellar week of trade.