The Loonie had another rough one as it spent most of the week net negative against the major currencies.
This week’s round of Canadian economic updates was arguably net positive, and with broad risk sentiment leaning mostly positive, it’s likely the root of CAD’s underperformance stemmed from weak oil prices and counter currency flows.
Canada Headlines and Economic data
Risk sentiment started the week on a positive foot, and with no major catalysts, it was likely a rebound in risk assets after last week’s sell off. Unfortunately, CAD didn’t participate, likely on oil concerns of a weakening demand outlook, as well as counter currency flows.
The Canadian Industrial Product Price Index (IPPI), increased 0.3% in August; Raw materials prices rose 3.2% in August vs. +3.0% in July. – both reads on producer prices were below expectations and correlated with a move lower in the Loonie during the U.S. trading session.
We also saw a dip in oil on the session, once again, on growing fears of a global economic slowdown as coronavirus cases rise (Pandemic to keep Asia’s growth at lowest since 1967, warns World Bank).
Real gross domestic product (GDP) grew 3.0% in July, following a 6.5% increase in June. – this read was slightly better than the expected read of 2.9% and the release roughly correlates with the broad move higher in the Loonie during the U.S. session.
The Loonie moved broadly lower during the Asia session as traders ran to safety after U.S. President Trump’s announcement on Twitter that he and the First Lady contracted COVID-19, increasing the uncertainty of the upcoming U.S. Presidential election.