The Canadian dollar ends up in the red across the board on counter currency strength and as oil strength fades on rising supply/falling demand expectations.
Canadian Headlines and Economic data
Monday:
Tuesday:
- The trend in housing starts was 218,998 units in August 2019, compared to 208,931 units in July 2019, according to Canada Mortgage and Housing Corporation (CMHC)
- Oil rises for fifth day on expectations of extended output cuts
- Global risk sentiment begins to shift towards positive for the week, starting with talk that China ready to sweeten deal by buying American goods, pushing traders away from safe haven assets into the “riskier” currencies like the Loonie and oil. Combined with the extended output cuts from OPEC, the Canadian saw broad bullish strength during the U.S. trading session.
Wednesday:
- Canadian industries operated at 83.3% of their production capacity in the second quarter, up from 81.1% in the previous quarter.
- OPEC downgrades forecast for oil demand growth in 2019 and 2020, citing economic slowdown – oil falls on this news, which was likely the driver for the broad weakness in the Loonie on the session, despite the wide positive global risk sentiment environment and positive production capacity data from Canada.
Thursday:
- New Canadian housing prices were down 0.1% at the national level for the third consecutive month in July
- One last push lower for oil on the session as the outlook for demand falls while expectations of production and supply will likely increase as U.S. production continues to grow.
Friday:
- Without any other catalysts from Canada and broad global risk sentiment leaning positive all week, it’s debatable that the pressure on the Loonie dollar during the Friday session may have stemmed from counter currency flows as most of the rest of the majors found strength this week from local catalysts (e.g., euro relief rally after the ECB meeting on Thursday, British pound support on potential that Boris Johnson is edging closer towards agreeing a new Brexit deal, and Aussie & USD strength on positive U.S.-China trade developments.
