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

  • 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.

WEEK AHEAD

* GBP Employment Change
* GBP Bank of England Inflation Report
* JPY Gross Domestic Product
* EUR Euro-Zone Consumer Price Index
* EUR Euro-Zone Gross Domestic Product
* EUR Euro-Zone Consumer Price Index
* USD Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell