CAD Weekly Review (Dec. 9 – 13)

With a lack of top tier events from Canada, it was all about geopolitical and counter currency influences for the Loonie this week. After mostly mixed price action throughout, the Canadian dollar ended up as a net winner, only falling to the British pound.

Canadian Headlines and Economic data

Monday:

• Canadian Housing Starts Trend Essentially Unchanged in November
• The total value of building permits issued by Canadian municipalities decreased 1.5% to $8.3 billion in October.
• Liberals move to deliver tax cut they say will help 20 million Canadians
• A slight negative global risk sentiment tone after headlines from China that included:
  • China tells government offices to remove all foreign computer equipment
  • China’s exports fall again in Nov. as trade war continues to bite
  • Politicians lash out at U.S. interference in Hong Kong affairs
• Risk sentiment prompted the Loonie to out perform the Aussie and Kiwi while falling to the rest of the majors.

Wednesday:

• Canadian industries operated at 81.7% of their production capacity in the third quarter, down from 83.3% in the previous quarter.
• Global risk sentiment starts to improve for the week on speculation that the U.S. and China are planning to delay the December tariffs, correlating with a broad move higher in the Loonie, which also correlates to oil bottoming out for the week and rallying higher from the U.S. trading session:

Thursday:

• Bank of Canada’s Poloz Sees Era of Low Global Interest Rates
• Big jump in positive global risk sentiment during the afternoon U.S. trading session after Trump Signs off on China trade deal to avert December tariffs. The big Conservative Party win in the U.K. general elections likely brought in some risk-on sentiment as Brexit uncertainty  waned. During this period, CAD out performed the yen and Greenback, while falling to AUD and NZD on risk sentiment influences, and falling to the EUR and GBP off of the U.K. election results.

Friday:

• A little bit of pullback in global risk optimism as details of the newly formed U.S.-China trade agreement were a little bit disappointing (only 50% of the $112B in tariffs would be rolled back and China agreed to buy $32B in additional agricultural goods over the next two years, conflicting with Trump’s claims of $50B in agricultural purchases. This reversed some of the moves from earlier this week to put the Loonie as a net winner when it was all said and done.