FX Daily Update
The National Bank of Canada | Oct 13, 2015 08:31AM ET
New signs of a slowdown in China
Although on Friday, we got confirmation from Statistics Canada that our economy added 12,000 jobs in September, it wasn’t enough to drive the loonie higher. Even though at first glance the reading appears positive, the fact that close to 62,000 full-time positions disappeared, but were replaced with selfemployed and part-time workers, quickly brought the loonie temporarily back down to earth. Combined with the announcement earlier in the week that the country’s stubborn trade deficit remains and a Bank of Canada that believes the job market should remain stagnant, it is difficult to get overly excited about the CAD.
It appears that all other factors notwithstanding, fluctuations in crude oil prices and the outlook for our raw materials have the greatest impact on movements in the loonie. The news early this morning that Chinese imports plunged more than 20% in September has brought about a major readjustment in terms of that country’s consumption forecast. Crude oil and currencies associated with natural resourcebased economies like the Canadian dollar are bearing the brunt of the diminished expectations. Out of the blue over the long weekend, the loonie fluctuated more than 150 bps, illustrating once again the importance of placing orders.
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