No love for the Loonie despite another hold off on rate cuts from the BOC and a big rally in oil, which was capped off at the end of the week with a very disappointing Canadian employment update.
Canadian Headlines and Economic data
Monday:
- Modest recovery in manufacturing performance continues in November
- A relatively negative start to the week given the net positive global risk sentiment climate and pop in oil prices off of news that China spared trade in their first retaliation to the U.S. Hong Kong bill and the better-than-expected Chinese manufacturing data. There doesn’t seem to be a direct catalyst for the Loonies slow grind lower, so it’s possible that it was traders taking off Loonie longs ahead of the BOC meeting.
Tuesday:
- Global risk sentiment turned negative on the Tuesday session to likely contribute to CAD’s further move lower after news of potential tariffs by the U.S. on French goods and comments from Trump that it might be better to wait until after 2020 election for a China trade deal.
Wednesday:
- Labour productivity of Canadian businesses grew 0.2% in the third quarter, after edging up 0.1% in the previous quarter.
- Bank of Canada holds rates, sees some evidence global economy is stabilizing – big buying reaction from traders as this was seen that rate cuts are not likely in the cards for the BOC any time soon.
- It’s also arguable that the Loonie was supported by the spike higher in oil prices on a drop in inventories ahead of an OPEC meeting.
Thursday:
- Bank of Canada: global uncertainty to last even if U.S, China strike truce
- Canada’s merchandise trade deficit with the world narrowed slightly from $1.2 billion in September to $1.1 billion in October.
- Canada’s Ivey PMI jumps to three-month high in November
Friday:
- Canadian employment fell by 71,000 (-0.4%) in November. The unemployment rate rose by 0.4 percentage points to 5.9% – a big sell off in the Canadian dollar on this event as it was a very big surprise, not only in terms of net change but also the unemployment rate. This quickly changes the economic outlook picture for Canada.
