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Canadian dollar has been in a down trend for 5 weeks now – it has lost about 3% against USD, JPY and
about 1.5% against EUR over this period of time. This is not a lot by historical standards but in this day of age – in times of very low volatility for almost all classes of traded assets – one can talk about the trends despite of their seeming insignificance in absolute terms.
Poor employment data releases in July and August lead to sell-offs on Fridays, that account for the most of the losses, one might argue, albeit it seems that these macroeconomic data have not defining but rather amplifying influence. Positive data released over the same time period – Foreign Portfolio Investments in Canadian Securities ( 21.4 bln CAD in May vs. expected 14.3 bln CAD and 10.2 bln CAD in April), Wholesale Sales (+2.2% in May vs. expected +0.6% and +1.4% in April), International Merchandise Trade (+1.86 bln in June vs. expected 0.0 bln and +0.58 bln in May), GDP (+0.4% MoM in May vs. expected +0.1% MoM and +0.3% MoM in April) – could not only turn the trend around, but had no lasting impact on the Canadian dollar rate of exchange whatsoever.
In search of that other factors, defining the current trend, one should not overlook the fact that Canadian dollar is commodity currency. Sometimes the exchange rates of commodity currencies are greatly influenced by the price dynamics of underlying commodity. It seems to be the case for the current period of time. Negative price development in oil market is taking its toll on CAD. Unless this trend will be turned around by inflationary forces Canadian dollar will be going down.
about 1.5% against EUR over this period of time. This is not a lot by historical standards but in this day of age – in times of very low volatility for almost all classes of traded assets – one can talk about the trends despite of their seeming insignificance in absolute terms.
Poor employment data releases in July and August lead to sell-offs on Fridays, that account for the most of the losses, one might argue, albeit it seems that these macroeconomic data have not defining but rather amplifying influence. Positive data released over the same time period – Foreign Portfolio Investments in Canadian Securities ( 21.4 bln CAD in May vs. expected 14.3 bln CAD and 10.2 bln CAD in April), Wholesale Sales (+2.2% in May vs. expected +0.6% and +1.4% in April), International Merchandise Trade (+1.86 bln in June vs. expected 0.0 bln and +0.58 bln in May), GDP (+0.4% MoM in May vs. expected +0.1% MoM and +0.3% MoM in April) – could not only turn the trend around, but had no lasting impact on the Canadian dollar rate of exchange whatsoever.
In search of that other factors, defining the current trend, one should not overlook the fact that Canadian dollar is commodity currency. Sometimes the exchange rates of commodity currencies are greatly influenced by the price dynamics of underlying commodity. It seems to be the case for the current period of time. Negative price development in oil market is taking its toll on CAD. Unless this trend will be turned around by inflationary forces Canadian dollar will be going down.
