The Loonie was hit hard this week on the usual risk aversion influences from the continued Coronavirus theme driving the markets lower over the past month, but also on a rate cut from the Bank of Canada with expectations of more down the road if necessary.
Canadian Headlines and Economic data
Monday:
- We saw a round of positive global risk sentiment during the Asia session that seemed to have lifted the Loonie, likely on news of the Bank of Japan pledging support sparking speculation of coordinated global policy action to combat the coronavirus.
- Canada Manufacturing PMI: Modest rebound in manufacturing output during February
Tuesday:
Wednesday:
- Labour productivity of Canadian businesses edged down 0.1% in the fourth quarter, after posting a 0.2% gain in the third quarter
- Bank of Canada cuts rates 50 basis points, Stands ready for more – obviously a big negative for Loonie bulls as the Canadian dollar instantly dropped on the news of the potential for more rate cuts to come.
Thursday:
- Poloz Defends Need for Deep Rate Cut to Counter Virus Impact
- Negative risk sentiment picks up steam during the Thursday trading session as Coronavirus fears spiked higher, especially after California declared state of emergency over coronavirus.
Friday:
- Canada gains surprise 30,300 jobs in February, posts wider-than-expected trade deficit
- Canada’s Ivey PMI shows economic activity expanding at slower rate in February
- Canada’s tourism industry ‘deeply affected’ by virus outbreak: minister
- More Coronavirus fears was likely a contributor to the negative Loonie sentiment despite the positive Canadian employment data, after the markets were hit with news of more than 100,000 infections worldwide and Coronavirus deaths rise to more than 3,300 worldwide. Oil was also likely a big contributor to Loonie’s weakness after prices dropped on news of OPEC failing to agree on massive production cuts.
