A quiet week of updates from Canada, which means the strong performance in the Loonie was due to counter currency weakness and a rebound in global risk-on sentiment after an early week of extreme geopolitical fears.
Canadian Headlines and Economic data
- Wholesale sales rose for a second consecutive month in July, up 1.7% to $65.4 billion.
- Oil Drops Amid Conflicting Reports About Speed of Saudi Recovery
- The Canadian dollar saw short-term weakness during the U.S. trading session, possibly on another round of risk aversion sentiment after we saw more negative developments from the U.S.-China trade story (Mnuchin appears to surprise Trump about request to cancel China visit to US farms, Donald Trump attacks China on trade and urges restraint on Hong Kong protests in speech to UN General Assembly). It’s also arguable that weakness came from falling oil prices due to weak economic data
- The Loonie saw broad strength during the U.S. trading session despite falling oil prices and no direct catalysts from Canada. The argument could be that it rallied with risk sentiment shifting away from negativity after a round of extreme risk-off sentiment on Tuesday. Or it’s possible that it was a rise in relative value as other major currencies were being hit on other issues (EUR & GBP hurt by Brexit developments, JPY & CHF lower on rebounding risk-on sentiment, USD weaker on negative U.S. geopolitical news, etc.).
- Non-farm payroll employees earned an average of $1,027 per week in July, up 0.5% from the previous month. On a year-over-year basis, earnings were up 2.7%.
- The Asia/European session rise in Loonie pairs may be attributed to this headline China says in close communication with U.S. over October trade talks, which likely had a broad risk-on affect on the markets.
- The news of the day to shake up the financial markests was that the White House deliberated blocking on all US investments in China. This is a pretty big deal that likely increased speculation that the U.S.-China trade deal gets a lot harder to get done, thus extending the uncertainty that looms over global economic growth and the markets. The Loonie saw a mixed reaction against the majors, but managed to hold on to its gains for the week.