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Another mixed week for the Loonie, and based on its relative performance, it’s likely the main driver was risk sentiment and counter currency flows.

Oil was likely a driver as well as it lead the Loonie higher mid-week after news of Saudi Arabia’s plans to cut production likely brought in more bulls for both assets.

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:

Business sentiment turned positive in Canada in Q4, BoC survey finds – “The survey, conducted ahead of many tougher restrictions aimed at curbing surging COVID-19 infections, found that while half of businesses say their current sales are below pre-pandemic levels, most expect them to rise in the next 12 months.”

Canada Business Sentiment Rebounded Before Second-Wave Lockdowns

Tuesday:

Canada PM shuffles top Cabinet players ahead of possible election

Oil hit an 11-month high just below $57 a barrel on Tuesday, bolstered by Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand.

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

This rise in oil prices was likely supportive of the Loonie for the through, along with counter currency weakness, most notably from the Greenback on speculation of more stimulus coming from the Biden administration.

Friday:

The Loonie tumbled on the session, likely driven by pandemic fears overshadowing improving Chinese trade data and weaker U.S. dollar / U.S. economic data (U.S. retail sales fall again in December, NY Manufacturing Activity Further Slows in January), driving oil prices lower as well.