Just as investors were daring to hope that the Bank of Canada might start reintroducing a more hawkish rhetoric in its monthly statements, a negative Canadian jobs report reanimated rate cut speculation.
Yesterday the ‘Loonie’ achieved a two-week high against the US Dollar as the BOC rate decision and upbeat domestic building permits figures pushed the commodity-driven currency higher.
The Canadian Dollar also recovered ground as fears surrounding the situation in Ukraine continued to ease.
Before the publication of Canadian employment figures currency strategist Camilla Sutton stated; ‘Every piece of data we’re getting is confirming weather has impacted growth but it hasn’t derailed growth, and globally central banks aren’t really moving away from their stance, and the Bank of Canada holds a very neutral tone, not a dovish tone. All of that is very good for a pro-cyclical currency like the Canadian Dollar.’
However, the ‘Loonie’ backtracked today.
Economists had forecast that the Canadian economy added 16,800 positions in February following January’s sizable 29,000 gain. But the nation actually lost 7,000 positions as part time employment fell by 25,900 and the Canadian participation rate dipped from 66.3 to 66.2 rather than rising to 66.4 as forecast.
The unemployment rate held at 7.0 per cent.
The Canadian Dollar broadly weakened after the report was published; shedding three days of gains against the US Dollar and edging lower against the Pound and Euro.
According to figures compiled by Statistics Canada, employment in the public sector tumbled by 50,700 while businesses in the private sector took on over 35,000 people.
US non-farm payrolls, on the other hand, showed a considerably stronger increase in workers than expected.
Forex strategist Greg Anderson said this of the North American news; ‘It wouldn’t surprise me to see another half-percent lower in CAD. It doesn’t juxtapose well against the US number, and it probably keeps the Bank of Canada with full justification to be very soft with rhetoric now for another three months.’
The Pound has experienced a fairly static trading session today due to a lack of influential economic data for the UK, but was modestly supported by the news that the Bank of England’s 12-month inflation expectation report has put the odds of an interest rate increase occurring at a two-year high.
Next week the Canadian reports to be most aware of include housing starts and the nation’s new housing price index. The publication of minutes from this week’s Bank of England policy meeting could also drive CAD/GBP movement.
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,0.5392,
Canadian Dollar,,US Dollar,0.9028,
Canadian Dollar,,Euro,0.6508,
Canadian Dollar,,Australian Dollar,0.9919,
Canadian Dollar,,New Zealand Dollar,1.0716,
US Dollar,,Canadian Dollar ,1.0980,
Pound Sterling,,Canadian Dollar,1.8557,
Euro,,Canadian Dollar,1.5263,
Australian Dollar,,Canadian Dollar,1.0085,
New Zealand Dollar,,Canadian Dollar,0.9334,
[/table]
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