[LFX]

Chinese farmers are using their silos to store copper and other metals. Central Banks are doing the same with CAD. The data shows a steady pick-up first in the purchase of federal bonds, with a shift recently out of money Movements in the CAD have little to do with the domestic environment and much to do with the international one. Much of its rise has been linked to a positive term of trade effect as commodities are bought as a hedge against potential inflation whether in assets or eventually at some point in goods and services. Oil is now more constrained by OPEC and especially Saudi Arabia keen on avoiding a squeeze of disposable income in the US and in G10. The latest disappointing July retail sales in Canada is a typical example as ex-auto came in -0.8% vs 0.1% expected mainly on the back of higher oil prices. This means that effectively upswings in oil are limited for now above 73.60 USD and on the downside below 67.60 as liquidity soaks up dips in this asset class. However, what matters for the CAD is oil volume and not its price, hence terms of trades may be underestimating the support for the currency.