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: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.
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:
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).
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.