Despite crude oil futures declining slightly following disappointing industrial production figures for China, the commodity driven Canadian Dollar posted modest additional gains against several of its most traded peers as local trade opened, continuing to benefit from Friday’s positive employment data, but was little changed against a broadly strengthening US Dollar.
The Canadian Dollar Exchange Rate was in the region of 0.9733 against the US Dollar as of 14:38 pm GMT
On Friday the ‘Loonie’ was able to rebound from a run of losses after employment data for Canada, and Canada’s main trading partner the US, wildly exceeded economists estimates.
Data compiled by Statistics Canada revealed a net change in employment of 50,700 in February, despite the average estimate of economists coming in at 8,000. All major industries excepting manufacturing recorded employment gains. The unemployment rate also held at 7 per cent, a four year low, despite industry experts foreseeing a climb to 7.1 per cent.
This positive news, in conjunction with developments in the US, allowed the Loonie to move away from a recent 8-month low against the US Dollar and strengthen against several of its other most traded peers.
Over in the US, employment advanced by 236,000 and the employment rate fell to a five year low, dropping from 7.9 to 7.7 per cent.
With confidence in US economic recovery buoyed by this news the Pound plummeted to 1.5247 and a 32 month low against the Canadian Dollar.
However, with demand for the ‘Greenback’ heightened, the CAD/USD pairing’s upward trajectory was quickly halted. Furthermore, despite the modest rebound the ‘Loonie’ still recorded a fifth consecutive week of declines against its American counterpart – the currency’s worst run for nine-months.
Jack Spitz, a Canada-based forex expert, commented: ‘Canada’s anomaly was that it improved on the crosses quite dramatically on Friday. As far as sustainable gains on the better-than-expected payroll gains in Canada, it was unwound amidst the overall bid for the US Dollar. Because the US payrolls were better, and the US economic improvement is gaining some momentum, and the US Dollar is bid across the board.’
Similarly, Deutsche Bank strategist Alan Ruskin asserted today: ‘It certainly makes sense that some longer-term investors would re-evaluate the thought that Canada is a safe-haven in relation to the US’.
Industry experts are now looking ahead to Canada’s capacity utilization data, scheduled for release on Friday. Economists have forecast that the report will show that in the final quarter of last year Canadian industrial production companies used 80.7 per cent of their production capacity compared with a third quarter figure of 80.9 per cent.
Additional ‘Loonie’ movement could occur this week as a result of economic news from the US.
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