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Mixed performance for the Canadian dollar this week, but ultimately a net gainer thanks to early positive global risk sentiment.

Oil also rallied once again on the week, likely supporting the Loonie as well.

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart
CAD Weekly Performance from MarketMilk
CAD Weekly Performance from MarketMilk

Canadian Headlines and Economic data

Monday:

Global risk sentiment started the week in the “on” position thanks to several catalysts: Moderna reports positive data on early-stage coronavirus vaccine trial, weekend comments from Fed Chair Powell to reiterate unlimited stimulus support, positive signs of the global economy returning to pre-covid levels. This was likely the reason for the strong strong start to the week for oil:

Overlay of CAD Pairs & Oil (Black Line): 1-Hour Forex Chart
Overlay of CAD Pairs & Oil (Black Line): 1-Hour Forex Chart

This was also likely the driver for the mixed performance for the Loonie for most of the week, under performing against the AUD and NZD while outperforming the rest of the major currencies through Thursday.

Tuesday:

The Loonie pulled back against the safe havens during the U.S. session as risk sentiment shifted negative on Moderna vaccine news and more U.S.-China tensions (US could delist Chinese companies).
Return of Car Traffic Fuels Surge in Oil

Wednesday:

Canada records negative annual inflation rate for first time since 2009
Canadian wholesale sales fell 2.2% to $63.9 billion in March; In volume terms, wholesale sales dropped 2.8%
Bank Of Canada Deputy Governor Lane reiterates bank doesn’t think a further rate cut would be advisable
Canadian home prices see robust gain in April, led by Ottawa-Gatineau

Thursday:

Canada sheds 226,700 jobs in April due as COVID-19 weighs: ADP

Canadian New home prices were unchanged at the national level in April following two consecutive monthly increases.

Risk sentiment moved negative on more U.S.-China tensions (White House report criticizes China’s economic policies, human rights violations) and weak U.S. economic updates (U.S. jobless claims total 2.4M) during the U.S. session. Combined with the Canadian jobs update, and we likely have the reason for the Loonie’s pullback against the safe havens (as well as oil’s pullback) into the Friday Asia session.

Friday:

Risks to Canada’s economic outlook are overblown, Stephen Poloz says
Canadian retail sales plunge record 10% in March, led by car sales
Oil ends at six-week high on tighter supplies, demand prospects