The Canadian dollar takes second place against the majors on the week thanks to rising risk sentiment and a lift from rising oil prices.

Major Market Drivers for the Canadian Dollar
Global risk sentiment was likely the main driver for Loonie pairs this week as Canada’s economic data releases (GDP m/m, manufacturing prices, and flash PMI data) didn’t seem to spark volatility or a directional bias among Loonie pairs, especially since those data points were net negative signals on Canada’s economy.
For a broader rundown of what drove global risk sentiment, check out my review of this week’s risk sentiment drivers and its effects on market behavior in my Japanese yen weekly review here.
In short, we saw early risk-off sentiment to start the week (and likely the reason we saw the Loonie dollar underperform more against the safe haven currencies like USD, JPY, & CHF), but traders turned bullish from Wednesday on a slew of developments including a dovish FOMC statement and improving U.S.-China trade talk sentiment from U.S. Treasury Secratary Mnuchin.
We can see a shift from Tuesday on that the Canadian dollar’s performance against the safe havens began to outpace its performance against the Kiwi and the Aussie dollar as risk sentiment shifted.
A strong argument for the Loonie’s strength this week could also be made due to the rally in oil prices:

After a weak start to the week on global growth fears, oil spiked higher on Tuesday as the U.S. slapped sanctions on Venezuelan state-owned oil firm PDVSA, a move to pressure Venezuelan President Nicolas Maduro to step down (currently no-longer recognized as the President of Venezuela).
Oil prices managed to creep back into positive (and Loonie pairs soon rallied after) on Wednesday, and continued to stay positive as US sanctions on Venezuela raised supply concerns, as well as U.S. dollar weakness after the dovish FOMC monetary policy statement.
After an Asia session pullback on Friday, we saw one more kick higher in crude and Loonie prices after a string of better-than-expected U.S. economic data.
Canada Headlines and Economic data
- Oil prices rise after US imposes sanctions on Venezuela
- Energy Slump Drives Canada’s Second GDP Decline in Three Months
- BoC’s Wilkins says tame wages imply continued slack in economy
- Markit manufacturing PMI: Slowest expansion of manufacturing production since December 2016
- Bank of Canada eyeing high consumer debt levels as it ponders hikes-Wilkins