Week in FX Americas – Loonie Rides Alone Amongst Commodity Pairs

The key focus come Monday will be on the data from China this weekend. Q2 GDP growth is expected to come in at +7.5% but there concerns remain over H2 and the political willingness to accept lower growth. The fear of a Chinese economic slowdown should not have too great a direct impact on the country with the Loonie. Canada’s exports to that country, about +4% of its total exports, are somewhat insignificant when you compare it to its exports heading south of its own boarders to the US, which is about +75% (too high an export concentration to one country is however another ongoing debate). 

From a Canadian standpoint, any slowdown to Mainland China can easily be offset by a bump in the trade figures to the US. Even from a commodity perspective, like oil, the loonie and Canada are much less exposed to China’s economic slowdown and is less likely to be effected by one like other commodity currencies (AUD, BRL, NZD etc).

The loonie ends the week stuck just south of the midpoint volatility witnessed this week. The market is on a natural pause from the Q&A Bernanke fallout mid-week. It’s a tad surprising to see the loonie hold up so well, especially as the “Big” dollar has ended the week rallying against most of its major trading partners.

Next week, investors will be dealing with the fallout of the Bank of Canada interest rate decision – the first under the stewardship of new BoC Governor Stephen Poloz. Analysts note that with a stronger than expected first-half-of the year, improved commodity prices, especially crude, and economic growth growing south of the boarder, many do not expect Governor Poloz to be dropping the hawkish bias any time soon.  

• US Consumer Sentiment Falls in 1st Week of July
• US Jobless Claims Rise in July
• Fed Member Elizabeth Duke to Resign
• Oil Price Rises Above $106 due to Political Risks
• Half of Fed Voting Members Expect End of QE in 2013
• Bernanke Comments Lead to Global Relief
• Fed’s Easing Could Adversely Impact Europe’s Recovery
• Oil Hits $106.5 on lower Inventory, Fed
• OPEC Says High Commodity Prices Era is Over
• US Mortgage Applications Fall 3.1 Percent as Rates Rise
• US Treasury Secretary Confident on China Economic Reform
• IMF Publishes Updated World Economic Outlook
• US Financial Regulators Put Forth 6 Percent Leverage Ratio Requirement
• U.S. Dollar Index Rises Before Fed Minutes
• Paulson Feeling Heat as Gold Fund Dropped 65% YTD
• QE Tapering Will Prevent Market Distortion
• IMF Calls US Budget Cuts Inappropriate
• Physical Traders May Start Buying on Gold Dip for Stronger 2H 2013

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