In February the Canadian economy added significantly more jobs than expected, and hopes that the improvement in the labour market would continue in March led to the Canadian Dollar achieving a six-week high against the US Dollar yesterday.
But after those hopes were dashed the ‘Loonie’ plummeted, dropping by the most significant amount since mid-2012.
The Canadian Dollar Exchange Rate was in the region of 0.9794 against the US Dollar as of 14:16 pm GMT
The ‘Loonie’ lost 0.8 per cent against the US Dollar after expectations for a 6,500 jobs increase failed to materialise.
Instead, a report compiled by Statistics Canada has shown that Canada lost 54,500 jobs last month, the worst monthly job loss since 2009.
The mammoth drop wiped out last month’s gain of 50,700 and added to the bleak outlook the Canadian economy has been acquiring in recent months.
The nation’s unemployment rate has also now risen from 7 to 7.2 per cent.
Meanwhile, separate reports showed that employment in the US increased by less than expected, although the nation’s unemployment rate did ease to 7.6 per cent.
Following the report’s release foreign exchange expert Blake Jespersen commented: ‘Huge miss on both numbers, but particularly the Canadian number. After many months of surprisingly strong employment data we’ve finally seen some give back, so a pretty swift reaction for the Canadian Dollar. There’s a lot more room for this to run. I think this is just the beginning of what could be a series of weaker employment numbers in Canada.’
Similarly, economist Paul Ferley stated: ‘This was a lot weaker than expected… so far this year it is pointing to weakening employment relative to strong gains in the second half of last year. It’s going to keep the Bank of Canada cautious.’
The Canadian economy’s outlook received another knock after trade figures for February also defied economists’ expectations. Although economists foresaw a modest surplus Canada’s deficit actually increased to 1.02 billion Canadian Dollars as imports increased and exports fell.
After the reports were issued the ‘Loonie’ slid against the majority of its most traded counterparts, hitting 97.92 US cents against its American rival.
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