A run of ‘Loonie’ gains was brought to an end on Friday and the Pound to Canadian Dollar (GBP/CAD) exchange rate climbed after Canada’s employment figures disappointed expectations
The GBP to CAD pairing spiked by 0.4% in the North American session as the prospect of a Bank of Canada rate increase became an ever more distant possibility.
Canadian data has been patchy of late, and this report reinforces the need for the BOC to keep fiscal policy accommodative for the foreseeable future.
The Canadian economy lost 9,400 positions in June rather than adding the 20,000 expected.
Although full-time employment increased by 33,500, part-time employment dropped by 43,000.
The participation rate held at 66.1.
The figures, compiled by Statistics Canada, prompted the first losses in the domestic currency for four days.
In the opinion of currency strategist Camilla Sutton, ‘We’re sitting with employment growth right now that is modest at best. It’s particularly important for how it feeds into the Bank of Canada next week, and it’s likely to deed the dovish tone coming from Governor Poloz. Having employment still moderate at best would suggest there’s still slack in the economy and inflationary pressures won’t rise.’
The Pound to Canadian Dollar (GBP/CAD) exchange rate achieved a high of 1.8330 after the report was released, riding high in spite of earlier UK data showing a drop in construction output.
The US Dollar to Canadian Dollar exchange rate also benefited from the figures, with the pairing advancing by 0.3% to 1.0620 Canadian Dollars.
The BOC is due to gather next week and given the Canadian economy’s current performance, the central bank is more likely than ever to leave interest rates unchanged.
As argued by economist John Clinkard; ‘Investments have improved but employment has not. There is still a significant amount of uncertainty and that is weighing on any decision to raise rates.’
Other Canadian reports to be aware of next week include Existing Home Sales figures, Manufacturing Shipments data and International Securities Transactions figures.
As the Canadian Dollar is a commodity-driven currency, reports from China and the US will also be of interest.
Volatility in the Pound to Canadian Dollar (GBP/CAD) exchange rate could also be caused by the UK’s inflation and employment figures.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5459,
Canadian Dollar,,US Dollar,0.9402,
Canadian Dollar,,Euro,0.6871,
Canadian Dollar,,Australian Dollar,0.9935,
Canadian Dollar,,New Zealand Dollar,1.0663,
US Dollar,,Canadian Dollar ,1.0630,
Pound Sterling,,Canadian Dollar,1.8311,
Euro,,Canadian Dollar,1.4551,
Australian Dollar,,Canadian Dollar,1.0064,
New Zealand Dollar,,Canadian Dollar,0.9422,
[/table]
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