It was a choppy week for the Loonie, influenced mainly by counter currency flows and risk sentiment. Oil had a solid week higher, which may have offset mostly disappointing Canadian economic data and dovish commentary from Bank of Canada officials.
Canadian Headlines and Economic data
During the Asia session, we saw global risk-off sentiment thanks to rising coronavirus cases headlines (Beijing Locks Down Part of City After Virus Outbreak at Market) and weaker-than-expected Chinese data to push the Loonie lower against the safe havens and higher against the comdolls, typical behavior during broad risk aversion environments. This behavior reversed during the U.S. session as risk sentiment shifted towards positive after better-than-expected U.S. economic data (Empire State index shows stable conditions in June after two months of record declines) and an announcement from the Federal Reserve that they will start buying individual corporate bonds.
IEA: Oil demand set for record bounce next year. Oil prices picked up during the London / U.S. session as seen below, likely the reason why we saw a near uniform move higher in the Loonie against the majors to close out the Tuesday session.
Risk sentiment flipped negative during the U.S. session, which is likely why we saw the Loonie fall against the safe havens, possibly a reaction to weaker-than-expected U.S. unemployment data and rising coronavirus cases headlines.
Volatility for the Loonie picked up quickly on not only Canadian data and oil prices, and once again on coronavirus fears, this time off of news that Apple will close some stores again in states that are seeing a resurgence of Covid-19 cases.