Week in FX Americas – A Loonie Stumble Could lead To A Fall

The Loonie bulls got rapped on the knuckles after Friday’s Canadian manufacturing data. The strong loonie may have helped cause December’s poor manufacturing headline. Shipments on the month plummeted, and managed to record the biggest one-month drop (–3.1%) in nearly three and a half years. This print does not bode well for Q4 economic growth for the recent darling of the industrialized world.

Excluding the automotive sector, which was the main drag on the headline, the landscape does not look any better (–1.8%). Canada’s recent data is only getting worse; last weeks negative unemployment number (–21.9k) now has company. In December, the mighty dollar was trading at a discount to the loonie, around 0.98c. January’s manufacturing print is not expected to fare any better as the “big” buck was again trading well below parity on the month.

Heading into the long Canadian weekend, there are still some “bad” long loonie positions out there. At the moment any dollar pullback are being bought.

 

US Industrial Production Falls 0.1 percent in January
US Dollar’s Title in Trouble?
US Treasury Nominee Lew Faces Confirmation Committee
EU and US Free Trade Agreement Talks to Begin
US Retail Sales Grow Slightly as Taxes Rise
Canadian Dollar Moves Back Towards 1
US Treasury Posts First January Budget Surplus in 5-years
US Treasury Backs Japan Stimulus Plan as Yen Nears 3-Year Low
Fed May Sustain Easing After Ending QE
US Fed Taking ‘Forceful Action’ on Economy
US Treasury’s Brainard: G–20 Must Avoid Devaluations
State of Union: Obama to Propose Spending to Boost Jobs

WEEK AHEAD

* AUD RBA Policy Meeting Minutes
* EUR German ZEW Survey
* EUR German Consumer Price Index
* GBP Bank of England Minutes
* GBP Jobless Claims Change
* USD Fed Releases Minutes
* USD Consumer Price Index
* EUR German Gross Domestic Product
* CAD Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Dean Popplewell

Dean Popplewell

Vice-President of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell