The Loonie outperformed most of the majors this week as positive Canadian economic updates outweighed negative risk sentiment.
Canadian Headlines and Economic data
No catalysts from Canada but we did see a broad move higher starting in the London session. This may have been off of a recovery in oil prices, which also don’t seem to have a direct catalyst. It’s possible traders were pricing in expectations of a fall in oil inventories, which we saw later in the week.
On top of the flip back to expansionary conditions shown by the latest Canadian manufacturing PMI data, another pop in oil may have been a contributor to the Loonie’s broad strength during the U.S. session. Risk sentiment was also positive during the session on hopes that a U.S. stimulus deal would get done by the end of the week.
The Canadian dollar topped out for the week, likely stemming from a change in broad risk sentiment. Traders seemed to have turned negative on risk after we got weaker-than-expected U.S. jobs read from ADP.
The weakness in the Loonie on the session was likely a reaction to headlines of a renewed trade war between the U.S. and Canada as Trump reimposed tariffs on raw Canadian aluminum and Canada promised retaliation
Net positive session for the Loonie as the better-than-expected Canada data outweighed the broad negative risk sentiment on the session driven by rising geopolitical tensions between the U.S. and China, and/or the eventual failure of the U.S. government to come up with a stimulus package before the end of the week.