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.
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