Loonie Going Out on A limb?

After two months of modest gains (+7k average), the Canadian economy unexpectedly shed jobs last month (-30.4k) on Friday, allowing the unemployment rate to rise (+7.3%), as employers pared jobs amongst the part-time staff (-51.6k). This was the largest decline in this category in eight months, offsetting a healthy gain in the full time print (21.3k). Average hourly wages advanced +3.6% from a year ago, the largest such gain in three-years. Despite the report being negative, the loonie ended Friday getting a lift. The percentage of workers in full time positions, at +81.37%, has returned to levels last seen before the onset of the 2008 recession. This should provide a boost to Canadian consumer confidence. The market seems to have gotten itself short CAD on the soft headline print and with a lack of follow through finds itself scrambling into the weekend.

Below are some other highlights of the week:


  • USD: Week started with Eric Rosengren, president of the Fed Bank of Boston, calling on the Fed to launch an aggressive, open-ended bond buying program.
  • CAD: Canadian building permits declined in June (-2.5% to +$6.58b) after a surprisingly robust previous month. The print beat the streets expectations of a softer -3.8% headline. May was also revised down to +7.1% or +$7.1b as opposed to the previous +7.4% print. Most of the decline was driven by softer construction plans in commodity rich Alberta and BC.
  • CAD: Canadian IVEY PMI was at 62.8 on a seasonally adjusted basis last month, suggesting that purchasing activity expanded m/m. Of note, both the employment and inventory index was higher at 54.3 and 55 respectively. The price index showed a similar pattern, rising to 64.8.
  • USD: US weekly claims unexpectedly surprised as the number of workers filing for weekly benefits fell slightly w/w, decreasing by -6k to a seasonally adjusted +361k. The previous week’s number was revised slightly higher, +1.5k to +367k. Analysts note that with the report been more volatile in recent weeks, they are trying not to read too much into it. However, the broad trend seems to have improved since June where the headline print stood at +385k. Digging deeper, the number of continuing claims has increased by +53k to 3.332m.
  • USD: US Trade deficit shrank from +$48b to +$42.9b in June. Consensus was looking for a headline print of +$47.5b. Declining oil prices helped bring the petroleum deficit down -$2.3b to +$22.5b (the lowest in two years), but ex-petroleum imbalances fell even greater, down -$2.9b to +$20.4in spite of the dollar strength. Exports rallied +0.9% while imports fell -1.5%.
  • CAD: Canada managed to release another hefty Trade deficit for June (-$1.81b), the widest in nearly two years as imports (mainly heavy machinery) hit a record high. The headline print was nearly double consensus. Imports rallied +2.3% to +$40.9b, a record since recordings began in 1971. On the export side, sales have advanced +0.2% to $39.1b. Volume advanced +1.1%, offsetting the -0.9% decrease in prices.



ASIA Week in FX



  • NZD, GBP and USD give us retail sales
  • Inflation and producer price data is reported in GBP, USD, NZD and CAD
  • Consumer sentiment is delivered in EUR and USD
  • USD has Philly Fed Manufacturing
  • Claimant count to be released in GBP and USD


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.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis 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