And despite some pullback by Friday, the Canadian dollar was able to put together a net positive performance, likely with the help of oil’s continued recovery.
Canadian Headlines and Economic data
Bank of Canada Chief Says Significant Stimulus Needed to Rebuild Economy – aside from the headline, Poloz also said the Canadian economy is in a position to ‘shake off’ the worst effects of the pandemic. Relative to situations in other countries, this was positive for Loonie bulls and likely supportive of the Canadian dollar.
Broad positive risk sentiment (continued recovery hopes and vaccine development news) was likely the driver for the Loonie’s price action on Tuesday as it outperformed the “safe havens” while underperforming against the other comdolls. Oil was rallying as well on the prediction of swift demand rebalance.
The broad, sudden move against the majors during the U.S. trading session was likely on a shift in risk sentiment towards negative, this time possibly on geopolitical tensions rising (e.g., U.S. weighs sanctions on Chinese officials, firms over Hong Kong, China approves controversial national security bill for Hong Kong).
The Loonie falls on the session despite a general positive risk vibe (which may have stemmed from this session from Europe as the bigger-than-expected recovery fund proposal). There doesn’t seem to be a direct catalyst as the current account numbers aren’t usually a market mover. So arguably, it could be a late reaction to oil weakness earlier?