The Canadian dollar was hit early weak oil prices, but coronavirus fears and counter currency flows managed to give the Loonie some wins in what was a net negative performance for the week.
Canadian Headlines and Economic data
- Canadian Housing Starts Declined in February 2020
- The total value of building permits issued by Canadian municipalities increased 4.0% to $9.2 billion in January
- Massive risk-off sentiment right the start of the week after Saudi Arabia Stuns the world with massive oil discounts in all-out price war was the likely catalyst for forex traders to move quickly out of the Canadian dollar, especially as oil prices dropped like a rock at the open
- A bit of global risk-on sentiment during the Asia session to lift the Loonie broadly on expectations of massive stimulus measures coming. It’s also possible that some strength came from reports of Russia possibly engaging in further talks with OPEC after oil prices crash.
- Canadian industries operated at 81.2% of their production capacity in the fourth quarter, down from 81.5% in the previous quarter.
- API data show U.S. crude supplies up by more than 6 million barrels last week
- Global risk aversion sentiment picked up early in the Asian session to begin mixing up Loonie performance after news of what was perceived to be a weak coronavirus response by the U.S. (travel restrictions from Europe?). It’s also possible traders were disappointed that the ECB didn’t do more to stimulate the economy (i.e., no expected rate cut) in their latest monetary policy actions. Whatever the case may be, the Loonie fell against the safe havens/lower-yielding currencies, while gained against the comdolls and a rate cut hit British pound.
- Bank of Canada expands liquidity programs and lowers overnight rate target to 0.75%. This was a surprise move that didn’t seem to spark much of a reaction from forex traders as they focused on more fiscal stimulus efforts from world governments. This sparked broad risk positive sentiment and was likely for the Loonie’s last minute push higher against the major currencies.