The Loonie turns in a strong week after a shift to positive in the geopolitical landscape turns traders towards risk assets, including a pop in oil prices.
Overlay of CAD Pairs: 1-Hour Forex Chart
Canadian Headlines and Economic data
Monday:
- Trump says US and China to resume trade talks – this was the catalyst for the big market sentiment turn around just before the European session open from the extreme negativity sparked during last Friday’s events. Loonie pairs rallied on the news that “China called the U.S.” to restart trade talks, even after Chinese media debunked the idea that China called the U.S. over the weekend, and managed to hold most of its gains off of this event through the whole week. Oil also took a sharp turn higher on Monday as seen below:
Overlay of CAD Pairs & Oil (Black Line): 1-Hour Forex Chart
Tuesday:
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- OPEC+ Boasts 159% Compliance With Oil Production Cuts – this was possibly the catalyst for the strong move higher in oil prices on Tuesday (as seen above). An argument can also be made that traders were betting the upcoming EIA data would should tighter supply. This was no help for the Loonie as it traded lower with the equity markets on global recession fears.
Wednesday:
- Oil jumps after US crude inventories drop by 10 million barrels, EIA says
Thursday:
- Broad mover higher in the Canadian dollar against the major currencies during the morning London session, possibly on the news that China won’t retaliate to new U.S. tariffs and their rhetoric on resolving the trade dispute with a ‘calm attitude.’ It showed China isn’t looking to escalate the trade war further which calmed down traders into lightening up on safe-haven bets and get back to risk assets.
- The average wage for Canadian Non-farm payroll employees was down 0.5% in June from the previous month, & up 2.5% on a year-over-year basis.
- Canada’s current account deficit (on a seasonally adjusted basis) narrowed by $10.2 billion to $6.4 billion in the second quarter
Friday:
- Real gross domestic product (GDP) grew 0.9% in the second quarter, after edging up 0.1% in each of the previous two quarters
- Industrial product and raw materials prices in Canada were down 0.3% in July
- After a bullish reaction to the positive Canadian GDP update, Loonie pairs took a step back into the weekend, likely taking cues from oil prices as they fell ahead of the hurricane on weakening demand expectations.
