Briefing highlights
- Net long bets on loonie surge
- Loonie at about 79 cents
- Markets at a glance
- What to watch for on housing front
- What to expect on U.S. inflation
- Earnings expected this week
- Google fires employee behind memo
- Valeant revenue falls 8 per cent
'Back in favour'
The speculative tide against the Canadian dollar has turned in rather dramatic fashion, rebounding from a big short to the strongest bet in favour of the loonie in more than four years.
"The CAD is back in favour," said Bank of Nova Scotia currency strategists Shaun Osborne and Eric Theoret, referring to the loonie by its symbol.
Mr. Osborne, Scotiabank's chief foreign exchange strategist, and Mr. Theoret, were commenting on the latest reading from the U.S. Commodity Futures Trading Commission, which showed the net long position for the loonie surging by $1.1-billion (U.S.) to more than $3.2-billion.
In contract terms, net longs now stand at almost 41,000.
These mark the strongest showing since early 2013.
"Gross CAD shorts are covering but gross CAD longs are adding to exposure strongly," Mr. Osborne and Mr. Theoret said in a report on the CFTC numbers, which were released late last week and measured as of a week ago.
"Recall that net CAD shorts stood at a record level at the end of May. Now, the net long CAD position reflects the most bullish the market has been on the CAD since 2013."
The loonie has surged since the Bank of Canada began signalling a tighter monetary policy, just before it actually raised its key rate by one-quarter of a percentage point in mid-July.
It has climbed from under 73 cents in May to the 80-cent range, trading today at about 79 cents.
The CFTC numbers also reflect issues with the U.S. dollar, which has been hurt largely by political developments in Washington, though it regained some ground after Friday's strong jobs report.
"The aggregate bear bet on the USD, expressed via the major currencies, rose by $1.3-billion in the week to total just over $11-billion, the largest bet against the USD overall since 2012," said the Scotiabank strategists.
Read more
- David Parkinson: Foreign traders love the loonie, but how long can it run without its legs?
- U.S. dollar is broken, so loonie may win ‘just by default’
- 80.5¢ may be about as good as it gets for born-again loonie
- Ian McGugan: Why you can thank Trump for the 80-cent loonie
With this week representing 10 years since the 2007 financial crisis began, it is notable that we are seeing volatility at the lowest levels seen in a decade
IG market analyst Joshua Mahony
Markets at a glance
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What to watch for this week
It's another week packed with corporate results, but a slower week on the economic front.
Tuesday
Investors will get to see the latest quarterly results from CVS Health Corp., Dundee Corp., Franco-Nevada Corp., Hydro One Ltd., TransAlta Renewables Inc. and Valeant Pharmaceuticals International Ltd., among others.
Wednesday
A couple of notables on the real estate front: Canada Housing and Mortgage Corp. releases construction starts for July, followed by Statistics Canada with a look at building permits in June.
BMO Nesbitt Burns believes housing starts slipped last month to an annual rate of 205,000, while building permits also dipped in June.
"Building permits are expected to fall 2 per cent in June, retracing just a small portion of the prior month's surge, with much of the softness expected on the residential side," said Benjamin Reitzes, BMO's Canadian rates and macro strategist.
"Broader economic strength and government infrastructure spendingshould provide a boost to the non-residential sector over the coming quarters," he added.
"Meantime, housing starts look to slide nearly 4% to 205,000 units annualized in July, while still maintaining the strong pace of building we've seen year to date. Starts have averaged 215,000 so far in 2017, well above demographi cneeds of around 190,000."
Earnings: Agrium Inc., Aimia Inc., Finning International Inc., IAMGold Corp., Manulife Financial Corp., Sun Life Financial Inc., TMX Group Ltd. and TransAlta Corp.
Thursday
Earnings: Autocanada Inc., Boardwalk REIT, Brookfield Asset Management Inc., CAE Inc., CI Financial Corp., Canadian Tire Corp., Emera Inc., Equitable Group Inc., Ivanhoe Mines Ltd., Leon's Furniture Ltd., Macy's Inc., Onex Corp., Quebecor Inc. and Trican Well Service Ltd.
Friday
On the where-is-inflation front, we'll get to see the latest on consumer prices in the United States.
Economists generally expect to see that consumer prices rose 0.2 per cent in July from June, with annual inflation at 1.8 per cent.
"After increasing only 1.6 per cent in the year to June, consumer prices haven't been feeling the heat so far this summer," said Royce Mendes of CIBC World Markets.
"But things are warming up. A seasonally adjusted increase in energy prices should see headline prices gain 0.2 per cent on the month, leaving the annual rate of inflation two ticks faster than [June]."
Earnings: Magna International Inc., Telus Corp.
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