Week In FX Americas - Loonie Rides Its Last Good Wave?

Includes: FXC, MXNS, UDN, UUP
by: Dean Popplewell
    • Canada Loses Jobs in April
    • UE Rate Unchanged at +6.9%
    • Participation Rate at 13-year low

No one was in the same ballpark when it came to forecasting Friday's Canadian job numbers. Market consensus was looking for a +12k print. However, Stats Canada delivered a report that actually shed jobs in April (-28.9k), mostly full-time and in the private sector (financial and hospitality). The unemployment rate remained unchanged at +6.9%. With 26k individuals ceasing to look for work happened to push the participation rate to a new 13-year low at +66.1%.

Friday's steep decline follows a surprise gain of +42.9k in March. Including April's number, Canada added only +2.3k net new jobs per month in the past three-months. Friday's report underscores the well-know volatility of the data. This is why it's more prudent to be looking at a three-month trend rather than just one month's.

The disappointing April print should keep Governor Poloz at the BoC on the sidelines at +1% for the foreseeable future. Most losses were reported in the full-time category, with -30.9k jobs actually lost. Year-to-date Canadian employment has advanced a paltry +0.8%.

With respect to the CAD and despite this week's uptick against the dollar (Week CAD high - $1.0815) the weak job's report should place further downward pressure on the loonie (CAD low after report $1.0906). Technical levels combined with riding a wave of better Canadian data have kept the CAD trading close to the $1.09. With a weak labor market and with further misses on economic figures expected should be cable of pushing the loonie lower and back to test the $1.1050 level where corporate dollar sell orders begin again to stack up. The risk reward play favored by most speculators favors buying USD on dips.

* GBP Employment Change

* GBP Bank of England Inflation Report

* JPY Gross Domestic Product

* EUR Eurozone Consumer Price Index

* EUR Eurozone Gross Domestic Product

* EUR Eurozone Consumer Price Index

* USD Consumer Price Index

About this article:

Tagged: ,
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here