Daily Currency Update

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Loonie Finished Last Week Net Positive Against the Greenback

CAD - Canadian Dollar

It was a net positive week for the Loonie. It rose a meager 0.05% versus the U.S. dollar, despite North American equity markets touching new highs. The Loonie is highly correlated with positive stock markets in the short-term, which was experienced last week. Regarding economic data, the only positive catalyst came from inflation numbers. The Consumer Price Index in Canada came in at 1.9%, in line with expectations. The Bank of Canada uses CPI data to help determine if interest rates need to be adjusted. Core CPI, which excludes volatile readings on energy and auto sales, spiked to 2.2% percent in November from 2.1% in October. However, the Canadian dollar erased most of its gains by the end of last week when Canadian Retail Sales, New Housing Price Index, and wholesale sales missed expectations. For now, the mixed economic data support the BOC rhetoric of holding rates steady in the short-term.
Rising crude oil market optimism continues as the United States and China are moving in the right direction to curb their trade war. Crude oil prices topped out last Friday around mid-61 dollars per barrel. Crude has seen a lift in pricing as expectations for global demand are rising for 2020.

Key Movers

The U.S. dollar index rose over 0.5% last week, with the British Pound and Euro the main losers, dropping more than 2% and 0.40%, respectively. The Kiwi and Canadian dollar and the Japanese Yen traded almost flat while the Aussie managed to gain more than 0,.30% against the U.S. counterpart. U.S. economic data is not showing signs of deterioration: industrial production figures for November printed 1.1%, above the expected 0.8% and above last month’s print (-0.8%). U.S. GDP for the third quarter came in at 2.1%, in line with previous and consensus numbers. Personal Consumption Expenditures have not shown any green shoots, but they are also in line with expectations and the prior level of 1.5%.
The biggest news came from House Speaker Nancy Pelosi and the Democratic majority House of Representatives, which voted to impeach President Donald Trump, accusing him of misuse of power and obstruction of Congress. A trial is currently set to take place in the Senate in the New Year; however, given the Republican Party majority there, it is highly unlikely that the president will be removed from office when senators cast their votes.

Expected Ranges

USD/CAD: 1.3140 - 1.3176 ▲

EUR/CAD: 1.4553 - 1.4588 ▲

AUD/CAD: 1.6980 - 1.7139 ▼

AUD/CAD: 0.9057 - 0.9117 ▲