Week in FX Americas – Loonie Contained For The Time Being

Canadian GDP brought forth few surprises on Friday with the Canadian economy growing in the second quarter very much in line with market expectations (+1.7% annualized vs. +1.6%). The best consumer spending performance in over two-years mostly backed the strength. However, June’s m/m print (-0.5%) was the biggest loss since the beginning of the global recession. The steep monthly decline was driven lower by construction, mostly due to the labor disputes in Quebec.

The recent soft tone of weak employment data and still elevated housing activity levels suggest little scope for change in policy from the Bank of Canada in the near term. What of the Canadian dollar? There seems to be some good demand for the loonie at certain levels. With expectations set for the Fed to start tapering next month, the CAD is likely to remain under pressure ‘outright.’ However, if the market buys into the US growth theory USD/CAD range should be somewhat contained.

Overall, the market seems to prefer to own USD and with potential rate differentials, geopolitical and EM concerns the loonie is best to be owned on the crosses rather than ‘outright.’ Week and month-end re-positioning ahead of the long labor weekend could end up providing an “outlier”-trading trading day for the CAD.


* AUD Reserve Bank of Australia Rate Decision
* USD ISM Manufacturing
* AUD Gross Domestic Product
* EUR Euro-Zone Gross Domestic Product
* CAD Bank of Canada Rate Decision
* USD US Federal Reserve Beige Book
* JPY Bank of Japan Monetary Policy Statement
* GBP BOE Asset Purchase Target
* GBP Bank of England Rate Decision
* EUR European Central Bank Rate Decision
* GBP BoE/GfK Inflation
* USD Change in Non-farm Payrolls
* CAD Unemployment Rate

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