The Canadian dollar (CAD) has been stagnating this week with much of the economic news out of Canada appearing flat. Today’s New House Price Index (NHPI) released by Statistics Canada, as an example, revealed 0% growth in the price of new homes purchased this past month by Canadians.
The data did not represent market contraction, per se, but rather a slowing down, or stagnation. The CAD was hard-pressed to make gains following this week’s reports, with the USD/CAD moving from its recent low of 0.9440 to its current price near 0.9650. Safe haven currencies like the Japanese yen (JPY) also made gains this past week, with the CAD/JPY moving to 83.80 from a recent high of 89.50.
Monday’s housing starts figure was below expectations, but not enough to warrant a rapid sell-off for Canada’s currency. Yesterday’s trade balance figures out of Canada also revealed not shrinkage, but stability. The C$0.6B growth in the northern giant’s surplus was not enough to awe investors and generate a buy-in for the Loonie.
Overall, Canada is not in a bad spot economically. It has undergone a wave of growth unmatched in most other countries and its job sector is in good shape. This past week’s short period of stagnation represents either a slow-down in line with a global faltering among industry and manufacturing, or a sluggish period as many provinces adjust from winter to summer schedules. Either way, traders reading this forex blog should note the CAD’s recent weakness brought on by this sluggish data. Such weakness does not appear systemic, though, and such bearishness will likely not last.
