Week In FX Americas – Loonie Unable to Fly too High

Canada’s bad February job report was quickly forgotten after Friday’s reported March surprise. The land with “the loonie” added +43k new jobs last month, the biggest increase in seven-months, which now pushes the six-month average to +10k. On the face of it, the double-digit print is not considered that bad given the subdued fundamental reporting of late. Digging deeper, about a 1/3rd of those gains came in the private sector, which suggests that there is room for improvement. Businesses are now beginning to ramp up hiring and investments to take advantage of the country’s weaker currency. The CAD is currently underperforming outright against its largest trading partner south of the 49th parallel ($1.0980).

A small concern is that most of last month’s job growth was due to a bounce-back in part-time jobs. The +30k rise follows two month’s of negative reporting. In the good’s sector, employment fell -15.6k, with manufacturing taking the brunt and reporting -9.2k job losses. Analysts note that this seems to contradict the apparent positive momentum in the sector – for instance the jump in exports for the month of February.

The loonie managed a hearty rally against the dollar immediately after the strong domestic report, but succeeded in giving back a third of its advance after the market digested the strong NFP report in detail. Not doing the CAD any favors was the softer than expected Canadian Ivey PMI print (55.2 vs. 58.3). The volatility in the pair remains confined, piggybacking the Fed’s strong conviction of draining their excess liquidity while Governor Poloz at the BoC policy is seen as firmly stuck in neutral.


* JPY Bank of Japan Monetary Policy Statement * GBP NIESR Gross Domestic Product Estimate * USD Fed Releases Minutes from March FOMC * GBP Bank of England Rate Decision * GBP BOE Asset Purchase Target * CNY CPI * EUR German Consumer Price Index * USD U. of Michigan Confidence

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