Canadian Dollar (CAD) Exchange Rate Weakens after Domestic Employment Falls
A surprise drop in Canadian employment left the nation’s Dollar softer across the board.
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Yesterday the ‘Loonie’ rallied against its rivals as investors engaged in a bit of profit taking and Canadian housing data came in above forecasts.
Canada’s housing starts rose to 194,800 in April rather than the 175,000 forecast while the nation’s new housing price index advanced by 1.6 per cent in March, year-on-year.
However, while these reports helped the Canadian Dollar gain on the Pound and ‘Greenback’, advances were short lived and the currency fell by the most for seven weeks on Friday.
The CAD/USD exchange rate fell from an almost four-month high after Canada’s employment report revealed an unforeseen drop in the number of people in work.
Canadian employment dropped by 28,900 in April rather than climbing the 13,500 expected.
The figures compiled by Statistics Canada detailed a loss of 30,900 full time positions, an increase of 2,000 part time jobs and a slight softening in the domestic participation rate to 66.1 per cent.
The Canadian unemployment rate held at 6.9 per cent.
Employment has now declined in two of the last three months.
Forex expert Don Mikolich said this of the report; ‘With the data weak across all sectors, it does suggest a widespread slowness in job growth – manufacturing is still struggling to add jobs.
With the market having strengthened so far these past few sessions, it’s not surprising to see a bit of a pullback’.
However, senior strategist Mazen Issa was less optimistic; ‘[The report] suggests that maybe we’re starting the second quarter on a softer footing than initially believed. There’s really no silver lining in this report.’
Even average hourly wages data disappointed, showing an annual gain of 1.6 per cent last month – down from a year-on-year gain of 2.4 per cent in March.
Next week there are very few influential Canadian reports to be aware of.
While Canada’s existing home sales figures and manufacturing shipments data will be of interest, movement in the commodity-driven Canadian Dollar is more likely to occur as a result of news from the US and China.
US inflation data and China’s retail sales figures will be of particular interest.
The Canadian Dollar is trading against the Pound in the region of 0.5439 and against the US Dollar in the region of 0.9172