Mixed week for the Canadian dollar as risk sentiment screams negative to push the Loonie higher against the other comdolls / Sterling, while falling against the safe havens.
Canadian Headlines and Economic data
- Big risk aversion day as traders priced in the growing probability of a big hit to the global economy by the coronavirus pandemic, now realized after U.S. President Donald Trump said the U.S. economy “may be” headed for recession. As usual, the suffered from the risk aversion environment, starting the week down against the major currencies despite the latest stimulative actions announced by the Bank of Japan, the Federal Reserve and the Reserve Bank of New Zealand to try to calm traders.
- Oil prices also dropped at the week open to likely contribute to the pressure on the Loonie early in the week.
- International transactions in securities generated a net inflow of funds of $26.1 billion in the Canadian economy in January
- Canadian manufacturing sales were down 0.2% to $56.1 billion in January, the fifth consecutive monthly decline
- Canada to give citizens income support amid coronavirus outbreak: Trudeau
- The Canadian Consumer Price Index (CPI) rose 2.2% on a year-over-year basis in February, down from a 2.4% gain in January.
- U.S.-Canada border to temporarily close to nonessential travel
- Another big risk aversion day in the financial markets, which actually saw a break in the usual risk behavior relationships as even bonds and gold fell. This is likely due to the rising concerns of bank liquidity, an extreme demand for U.S. dollars, and the rising probability of a deep global recession. The Loonie’s performance diverges according to the usual risk behavior relative to the majors: falling against the safe-havens and rallying against the comdolls and Sterling.
- U.S. crude hits 18-year low as lockdowns spread
- ADP Canada National Employment Report: Employment in Canada Increased by 7,200 Jobs in February 2020
- Canadian New home prices were up 0.4% at the national level in February.
- Risk sentiment swings positive on the Thursday trading session, likely a reaction to the continued stream of stimulus actions by global central banks, including a €750bn bond-buying program from the ECB, interest rate cuts and QE from the RBA, and the announcement of a third coronavirus aid package this week from U.S. lawmakers. As expected, the Loonie reverses Wednesday’s price action by falling against the comdolls and rising against the safe havens.
- Canadian Retail sales rose for the third consecutive month, up 0.4% to $52.0 billion in January.
- After a continued risk-on rally during the Asia session for the Loonie, sentiment turned during the U.S. session likely moving on counter currency news and coronavirus updates, including actions to limit the accelerating number of cases of coronavirus, and the damage it is doing to financial market liquidity and the economy.
- In case you missed it, here is a cheat sheet on Who Has Done What for Their Economies Since the Coronavirus Pandemic Hit