Not a great sign for the loonie
The Canadian dollar jumped on GDP headlines but a few things are working against it:
- The details of the report — particularly on business investment and consumption — were weak and that reversed some of the optimism
- Oil prices are down 2.8% on the combination of economic worries higher production in August from Russia and Nigeria
- Jitters about the Bank of Canada. The meeting is next week and we haven’t heard anything from the BOC since July 10 when they warned about trade worries. Needless to say, those have gotten worse. No cut is expected, but it’s possible and a hint at an Oct cut is growing more likely
Technically, it’s shaping up to be an outside bullish reversal in USD/CAD and what looks to be the highest close since Aug 19. The range trade still dominates but this isn’t a good sign.
