Technical Analysis

Canadian information has been beating expectations but it surely in all probability will not final. Here is what to do

Canada’s information has been robust

Here is a take a look at the financial shock index from Citi, it measures the place financial information is healthier or worse than anticipated. In the meanwhile, Canada is on high after robust employment and CPI information.

Citi economic surprise index

It has been a pleasant run for Canada however a couple of issues are beginning to weigh:

Oil value declines are quickly going to hit spending and investmentHousing has been sluggish, taking away a tailwind from the previous decadeEmployment has been inexplicably strongCanadian pure fuel costs are depressed

For a commerce, I feel the day to observe shall be January 31. That is when the November GDP report is due and it is wanting prefer it could possibly be very weak. The consensus is -Zero.1% after a +Zero.three% studying in October but it surely could possibly be weaker. That is as a result of November information on wholesale gross sales, manufacturing gross sales and retail gross sales had been all poor.

On the flipside, the euro has been overwhelmed down on poor financial information. It is effectively deserved as a result of there are many information factors they usually’ve been uniformly dangerous. That stated, the euro has held up and ECB hikes are priced out for greater than a yr.

The EUR/CAD chart hit a six-month excessive at the beginning of the yr however has been in a pointy retreat. It is close to the 2019 now and a few minor trendline help. I’d in all probability desire GBP/CAD or one thing else however on a pure economics commerce, EUR/CAD longs are compelling.

EURCAD chart

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