Last week, the Canadian dollar held steady versus the greenback, having traded in a very narrow range, says Prab Sagoo, associate director at Nasdaq Advisory Services, in his weekly note.

However, “there was a large shift in the hedge fund positioning, [with] net long bets against the loonie [having] dropped dramatically and sentiment moved to an overall net short standing,” says Sagoo. “The reason for the sharp change wasn’t immediately clear, but reports suggest it may be related to broader EU-macro sentiment positioning with regional elections on the horizon.” (Read: Is Europe next for election shock?)

It’s expected that strong GDP and employment numbers might provide some support for the Canadian dollar, notes Sagoo. Reports on both come out on Friday.

For more on currency and geopolitics, read:

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The BoC’s unofficial lower-loonie policy

Currency winners and losers for 2017

Why to expect more currency volatility

4 drivers of emerging markets

How geopolitics is affecting emerging markets

Additional highlights

  • Last week, the TSX finished with slight losses (-0.3% on the week) but it still remains positive year to date. Friday saw the U.S. healthcare bill withdrawn, and the S&P500 finished down 1.4% on the week.
  • Losses were mostly due to weak energy and financial names, both down more than 1%, as investors moved to a risk-off setting. Energy continues to see pressure from uncertainties in underlying oil prices, so the sector is now down 11% year to date and is significantly underperforming the markets.
  • Meanwhile, utilities, staples and gold were the best performers due to the shift to safety. Small caps outperformed slightly.
  • This week, the Canadian economic calendar is on the lighter side. GDP and employment on will headline on Friday. The U.S. calendar will also see GDP released on Thursday, and data on housing, consumer and international trade is coming.