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Positive economic and business sentiment updates helped lift the Loonie higher this week, countering a mid-week fall in oil prices due to falling demand.

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart
CAD Weekly Performance from MarketMilk
CAD Weekly Performance from MarketMilk

Canadian Headlines and Economic data

Monday:

Recovery in Canadian Consumer Confidence Shows Signs of Cooling

The total value of Canadian building permits fell 3.0% to $7.8 billion in July

Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), rose 0.7% in July

Tuesday:

Canadian Manufacturing PMI signals fastest growth since August 2018

Wednesday:

Labour productivity of Canadian businesses rose strongly (+9.8%) in the second quarter, while hours worked fell at a much faster pace than business output.

Oil prices fall on lower U.S. refinery demand projections

Overlay of CAD Pairs & Oil (Black Line): 1-Hour Forex Chart
Overlay of CAD Pairs & Oil (Black Line): 1-Hour Forex Chart

Thursday:

Canada posts July trade deficit of C$2.45 billion vs. C$1.59 billion deficit in June

Broad move lower in the Loonie, likely due to a combination of broad negative risk sentiment (sparked by weak economic updates around the globe (e.g.,  Eurozone Services Business Activity Index: 50.5 in August vs. 54.7 in July, 115,762 U.S. Job Cuts in August, recovery in China’s services sector loses a step) and continued weakness in oil prices.

Friday:

Canada added 245,800 jobs in August, the fourth consecutive monthly increase though the pace of new gains slowed

Canada’s Ivey PMI shows activity expanding for 3rd straight month in August

The net positive updates above from Canada were enough to counter the continued weakness in oil prices, and when coupled with the positive risk environment after the better-than-expected U.S. employment update (U.S. creates 1.4 million jobs in August, unemployment falls to 8.4%), the Loonie was able to close the week out as a total winner against the major currencies.