Week in FX Americas – Go On: Lean On The Loonie

Finally, someone is looking to ‘lean on the loonie’. This currency is only now trying to play catch up with its antipodean foes -the Aussie and the Kiwi. Both of those currencies of late have found fault with their largest trading partner, China, and with their own strong correlation relationship with commodity prices. The currency pairs have lost -10% in the past month alone. Mind you, the respective central banks rhetoric has also been allowed to lend a directional helping hand.

In Canada, Friday’s domestic story was the weaker than expected inflation (+0.2%) and retail sales reports (-0.3%). With the lack of other fundamental data published Stateside, softer numbers have managed to lead the CAD astray, just shy of 1.05. Not helping the loonies’ plight is the recent “spat of market volatility and sentiment” that has been driven by the Fed’s transparent thoughts and copy this week.

Soft inflation (+1.1% vs. an expected +1.2%) is not just a Canadian issue; it’s a global one. This number should not be a huge shock for the new BoC Governor Polaz, who politely declined to comment on the Bank’s 14-month tightening bias at his first press conference this week. However, the inflation surprises continue to run to the lower side of expectations this year. Analysts have already noted that there is no new timetable for the BoC rate hikes due to the Fed’s recent moves. Today’s data again confirms that the BoC should remain on hold until H2 of next year at least.

WEEK AHEAD

* GBP Inflation Report Hearings
* USD Gross Domestic Product Annualized
* EUR Unemployment Change
* EUR Unemployment Rate
* GBP Gross Domestic Product
* JPY National Consumer Price Index
* JPY National CPI Ex Food, Energy
* EUR Consumer Price Index
* EUR Harmonised Index of Consumer Prices

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
Dean Popplewell

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