The Canadian dollar gained 0.3% during the day yesterday as equities rose strongly on optimism about a US stimulus deal. That modest gain is the first up move in the Loonie is about a week. The Canadian dollar’s gains were limited by weak oil prices which are down 5% this morning on both supply and demand concerns. Real estate and construction which have been important contributors to growth in Canada in recent years remain under scrutiny. The value of Canadian building permits rose by 1.7% in August from July. Still, permits were down 11.2% compared with the same month in 2019. And the risk of a housing crash has resurfaced again with a report from UBS suggesting that Toronto is of the global cities most at risk of a “sharp correction”. Regardless, for today, the focus will be on oil prices. Any further decline in oil prices and the Loonie will quickly give up yesterday’s gains.
