A very mixed but net negative week for the Loonie as counter currency influences was the main driver of price action. Traders had to battle between positive risk sentiment influences from Brexit headlines and U.S.-China trade headlines, with very little influences from Canada on the week. And oil prices were never able to recover from an early week drop, despite the positive sentiment shift going into the weekend.
Canadian Headlines and Economic data
- No Canadian catalysts to start the week, so it’s likely the risk-off global sentiment was likely what had mixed to start the week, under performing the low-yielding majors while up against the comdolls. The risk aversion vibes was likely on a combination of weak economic data from China (imports and exports fell more than expected in September) and doubts began to rise on the recent ‘phase 1’ trade agreement between the U.S. and China after China says it wants more talks before signing trade deal with Trump. This was also a big drag on oil prices, which fell on the session and stayed low for the following sessions:
- Canada’s real estate market in full recovery mode as home sales rise
- Oil prices steady on trade war jitters but OPEC hints supply restraint
- Foreign investors acquired $5.0B of Canadian securities in August, following two months of divestment
- The Consumer Price Index (CPI) rose 1.9% on a year-over-year basis in September, matching the increase in August. Excluding gasoline, the CPI rose 2.4% for the third consecutive month.
- Brexit headlines were once again the dominant market forces during the Wednesday session, first driving traders into safe havens as doubts on the Brexit deal arose after reports of the DUP not likely supporting the deal. But risk sentiment moved back into the positive by the start of the U.S. trading session as traders saw that a Brexit delay (i.e., avoiding a no-deal Brexit was seen as positive) was still a possibility if the U.K. Parliament could not agree on the new deal. The Loonie falls against the majors on both positive Brexit vibes (which supported the European region currencies EUR, CHF, GBP) and the other comdolls (AUD & NZD).
- Canada adds 28,200 jobs in September: ADP
- Canadian Manufacturing sales rose 0.8% to $57.6B in August, following two consecutive monthly declines
- China says it hopes to reach phased trade pact with U.S. as soon as possible – this was likely the story behind oil’s rally on Thursday session, and somewhat lifted Loonie against most majors during the U.S. session.