It was a mixed but net positive week for the Canadian dollar, likely driven by the early rally in oil and broad risk-on lean in the financial markets.
The net gains came despite a light but arguably net negative round of economic updates from Canada.
Canada Headlines and Economic data
After an opening drop for both oil and CAD to start the week, both rallied through the Monday session on expectations of lower crude oil stock pile updates to come later in the week.
With no major catalysts from Canada, it looks like the Loonie was more influenced by broad risk sentiment on the session that oil’s rally. Traders leaned broadly risk-on on the session, potentially sparked by positive stimulus news from the U.K. during the London trading session (UK FCA to announce further proposals to support consumer credit borrowers impacted by coronavirus). This may be the main reason why we saw CAD rally against the JPY and USD, but fall against the other comdolls and European currencies.
- Trade surges on a quarterly basis but remains largely below 2019 levels
- Service exports were down 2.5% while service imports increased by 1.2%
- Exports of medical equipment and products fell 31.3%, following a 13.8% increase in August.
The Loonie takes a tumble on the session and into the Friday session, likely driven by falling oil prices. This behavior may have stemmed from renewed fears of a surge in coronavirus spread and continued uncertainty from the U.S. elections.
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