CAD Weekly Review (June 1 – 5)

Even with the latest Bank of Canada rate statement and Canadian jobs update, the Loonie was mostly quiet and finished the week mixed against the majors, mostly moving on global risk sentiment and counter currency flows.

Canadian Headlines and Economic data

Monday:

Sharp downturn in Canadian manufacturing conditions recorded in May

Traders continued the focus on the “reopening trade,” supported at the start of the week with better-than-expected Chinese manufacturing PMI data, rather than the continued U.S.-China tensions (China cuts US ag purchases) &  mass U.S. protests over the weekend.  This was likely the reason for the mixed start as the CAD out performed the “safe havens” while under performing against the Aussie and Kiwi.

Tuesday:

Positive risk sentiment picked up steam on Tuesday, likely on news that China bought U.S. soybeans after halt to U.S. purchases ordered, easing U.S.-China tensions a bit for traders.  Monday’s price action continued its momentum, but we did see the Loonie fall against the euro and Sterling for reasons that don’t seem apparent at this time. This seems to have been a supportive catalyst for oil prices as well:

Wednesday:

The Loonie saw a pickup in action ahead of the BOC statement, likely on broad risk sentiment moves. The fall in CAD against the majors seems to correlate with the release of European and UK PMI data (improving but still showing severe contraction). Risk-on came back during the US session on a refocus back to the “reopening trade,”  and possibly on covid vaccine developments (US should have a “couple hundred million” doses of a Covid-19 vaccine by start of 2021, Fauci says).

Canadian Labour productivity rises 3.4% q/q as hours worked fall faster than output

Bank of Canada maintains target for the overnight rate, scales back some market operations as financial conditions improve

Bank of Canada’s optimism signals that the worst could soon be over

Thursday:

Canada’s merchandise trade deficit with the world widened from $1.5B in March to $3.3B in April.

Friday:

In May, Canadian employment rose by 290,000 (+1.8%), while the number of people who worked less than half their usual hours dropped by 292,000 (-8.6%).

Canada’s Ivey PMI rebounds from record low in May

On top of the positive data from Canada and rise in optimism for North American jobs data, the rise in oil on the session off of OPEC news (OPEC, Allies to Finalize Oil-Cut Extension After Resolving Dispute) was likely a contributor to the Canadian dollar’s London / U.S. session rally.