Foreign investors are scooping up significant quantities of Canadian securities. International Securities Transactions for June, released yesterday, showed that non-Canadian residents accumulated CAD $9 billion in Canadian assets in June. Net foreign investments for the first half of 2016 reached CAD $80.4 billion, a record never before seen over a six-month period. These major investments denominated in Canadian currency may help explain the relative strength of the Canadian dollar.
Major data for gauging the strength of the Canadian economy, including June Retail Sales and the July Consumer Price Index, will be released this morning at 8:30 and will dictate where the loonie is headed. According to our economist, car dealership sales and service station income, helped by higher prices at the pump over the month, will provide support to the Retail Sales reading. However, July inflation will no doubt be weak given that prices at the pump failed to rise at the seasonal average pace, due to the major downturn in crude oil prices in July.
