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.  


* USD Advance Retail Sales
* AUD RBA Policy Meeting – July Minutes
* GBP Consumer Price Index
* EUR Euro-Zone Consumer Price Index
* EUR German ZEW Survey (Economic Sentiment)
* USD Consumer Price Index
* JPY Bank of Japan June 10-11 meeting minutes
* GBP Bank of England Minutes
* CAD Bank of Canada Rate Decision
* USD Fed’s Bernanke Semi-Annual Policy Report to House and Senate
* USD U.S. Federal Reserve Releases Beige Book
* EUR G20 Labour Ministers Meeting in Russia
* CAD Consumer Price Index

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