The Loonie was the biggest loser of the week despite improving economic updates from Canada. It was likely the sour Canadian business outlook, expectations of a historic federal budget deficit, and oil weakness at the end of the week that had traders pushing the sell button on CAD into the weekend.
Canadian Headlines and Economic data
- The overall Business Outlook Survey indicator fell sharply, with most constituent indicators declining to levels well below their historical averages.
- Businesses expect weakness in domestic & foreign demand due to impacts from COVID0-19 and low oil prices.
- Businesses in most regions & sectors to cut investment spending. Hiring will be muted but some positions will be refilled after recent layoffs
Rising risk aversion sentiment from U.S. equities amid refreshed concerns of how the coronavirus will impact the economy were likely big contributors to CAD and oil’s fall during the Thursday U.S. trading session.
The positive Canadian jobs update (Canada Employment +953K in June; unemployment rate drops to 12.3% from 13.7% in May) and global risk sentiment flipping back to positive (likely on news from Gilead that remdesivir coronavirus treatment reduces risk of death) helped the Loonie bounce on the session, but it wasn’t enough to get it into the green before the Friday close.