Canadian Dollar Mixed As Housing, Jobs Data Unable to Trigger Momentum

The Canadian dollar is trading mixed against multiple currency rivals to kick off the trading week, despite bullish housing and jobs data that should have buoyed the loonie. The paucity of momentum will be more pronounced as the Canadian dollar may trade sideways ahead of the central bank’s policy announcement later this week. Will the currency reverse its downward trend?

According to the Canada Mortgage and Housing Corporation (CMHC), seasonally adjusted annual rates of housing starts climbed 8.8% to 213,224 units in January. This is higher than the market forecast of 205,000.
Statistics Canada reported on Monday that building permits surged 7.4% in December, up from the 3.5% decline in November. The median estimate called for a 2.3% gain.
Last week, the Canadian economy reported a huge jump in jobs for January. The national economy added 34,500 new jobs, up from the creation of 27,300 positions in the previous month. The reading also came in a lot higher than market expectations of 15,000. All the new jobs were full-time, and average hourly wages soared 4.4% year-over-year.
Next on the data front will be new motor vehicle sales, which are anticipated to come in at 123,000.
On Wednesday, the Bank of Canada (BoC) will convene and most analysts say that the central bank will leave the overnight target rate at 1.75%. Experts note that the BoC will likely adopt the same language as other central banks, informing the public that it will monitor the Wuhan coronavirus outbreak. The consensus is that the economic fallout from the virus will be felt globally, but China will experience the worst of it. Beijing could record a first-quarter gross domestic product (GDP) reading of under 6%.
That does not mean the Great White North’s economy is free of threats. TD Bank is sounding the alarm over the record-high corporate debt that soared to 118.7% of GDP last year.

This adds another layer of risk to an already credit constrained Canadian economy. In the event of an economic downturn, corporate indebtedness could result in widening corporate bond spreads and increased delinquency rates, which would amplify the severity of a downturn.

A steep decline in crude oil prices did not help the loonie either. March West Texas Intermediate (WTI) crude futures cratered $0.66, or 1.31%, to $49.66 per barrel. April natural gas futures plunged $0.08, or 4.25% to $1.78 per million British thermal units (btu).
The USD/CAD currency pair rose 0.13% to 1.3325, from an opening of 1.3308, at 15:57 GMT on Monday. The EUR/CAD fell 0.14% to 1.4543, from an opening of 1.4569.

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Original from: www.earnforex.com