It was a mellow week for Loonie traders as there were few catalysts moving the markets overall. Counter currency moves was the main driver for Loonie pairs, which closed mixed on Friday for a net loss.
Canadian Headlines and Economic data
Monday:
Canada’s Ivey PMI shows activity expanding at a slower pace in November – “The seasonally adjusted index fell to 52.7 from 54.5 in October. While it was the sixth straight month that the PMI was above the 50 threshold indicating an increase in activity, it fell short of analysts’ expectations for 54.7.”
Wednesday:
Bank of Canada Holds Steady on Rates, Reiterates Guidance
Holds overnight rate at 0.25%; will continue to buy Canadian government bonds at a rate of C$4B per week.
“While inflation had recently been running hotter than anticipated, policy makers suggested “considerable” economic slack is expected to weigh on price pressures for the foreseeable future.”
On recent strength in the Canadian currency, the bank said it’s due to a “broad-based decline” in the U.S. dollar, echoing language used in the October statement.
No major reaction from the Loonie on the event but it did drift net lower, likely on a shift towards negative in global risk sentiment as Brexit hopes faded during the session (UK PM Johnson warns EU over Brexit trade talks: back down or it’s no-deal)
Thursday:
Crude oil advances on vaccine rollout in the U.K. but retreats on Iraq – “Oil prices climbed nearly 3% on Thursday, with Brent surging above $50 a barrel for the first time since early March.”
This seems to have been supportive of the Loonie against the majors, with exception against the AUD and NZD.
Overlay of CAD Pairs & Oil (Black Line): 1-Hour Forex Chart
