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After mixed price action on counter currency weakness, geopolitical issues in Europe and between the U.S.-China drives Loonie pairs and oil into the red on the week.
Canada Headlines and Economic data
Tuesday:
- China appears to make veiled threat about rare earth minerals crucial to US technology industry
- Italian bond yields jump, bank shares fall as Rome, EU head for budget showdown – with no other direct catalysts, this is likely the reason why we saw Loonie pairs fall during the European session as the market’s refocus on Italian debt/budget likely sparked a fresh round of global risk aversion sentiment.
- The US-China trade war could slash economic output across the world – trade war fears, the fresh negative developments and its affect on the global economy are starting to take center stage, prompting more risk aversion behavior. Likely why we saw Loonie pairs start to turn lower for the week as it got hit by the global risk aversion sentiment and the pressure on oil prices as demand will likely decline as global growth slows.
Wednesday:
- Bank of Canada maintains overnight rate target at 1.75%
- Upbeat Bank of Canada Pours Cold Water on Rate Cut Speculation
Thursday:
- Canada’s current account deficit (on a seasonally adjusted basis) widened by $0.7B in the first quarter of 2019 to $17.3B
- The average weekly earnings of non-farm payroll employees in March was up 0.8% from February; Compared with 12 months earlier, earnings grew by 1.9%
- Wilkins Sees ‘Solid’ Performance for Canada Despite Soft Patch
- Brent falls on trade war worries, tight oil market supports – weak oil and the broad risk aversion sentiment is likely the drivers for the increase broad weakness in Loonie pairs on Thursday and into the weekend.
Friday:
- Real gross domestic product (GDP) grew 0.1% in the first quarter, the same growth rate as the fourth quarter of 2018
- Industrial Product Price Index (IPPI) rose 0.8% in April, following a 1.3% increase in March – both producer prices and GDP update came in above expectations, and along with USD weakness on the Mexico tariff news, we saw Loonie pairs bounce off of the lowest levels of the week into the weekend.