USD/CAD – Loonie Weaker After Stronger US NFP

The Canadian dollar was weaker on Thursday on the wake of dual North American Jobs Reports. The releases are published at the same time but there was higher anticipation around the the U.S. nonfarm payroll figures (NFP). Total U.S. NFP employment rose by 257,000 in January, crushing expectations of a 228,000 rise. The Canadian numbers also beat expectations by posting 35,000 new positions higher than the 4,500 forecasted.

The USD/CAD did not react as quickly as other pairs because of the positive numbers on both sides of the border. While the EUR/USD moved 107 pips after 10 minutes, the Loonie only moved 67 pips while traders dug deeper into the data. The U.S. managed dispel doubts surrounding the growth of the Economy. The U.S. has published a string of underperforming indicators this year: USD advanced gross domestic product (GDP) at 2.6%, retail sales, -0.9%, lower purchasing managers’ indexes, and a growing trade balance deficit (-$46.6 billion). The NFP provided the shot in the arm to the U.S. economy that puts the interest rate hike back on schedule.

Potential interest rate divergence alone would have appreciated the USD, but as the Canadian report was dissected the fact that of the 35,000 new positions the vast majority was made up of part-time workers deflated the positive decline of the jobless rate to 6.6 percent.

The Canadian dollar had rallied after the trade deficit was lower than the estimates. The deficit remained unchanged at CAD 0.6 billion and the price of oil had a positive Asian session. After a week that was dominated by Greek debt headlines the biggest economic indicator closed out the week by crushing market expectations. The Federal Reserve members who made statements on Friday were supportive of a summer interest rate hike if the data continues to point to a strong U.S. economy. The CAD continued to slip as the economy struggles to adjust to lower oil prices and fears of the effects of lower for longer interest rates on the Canadian housing market.

USD/CAD for Friday, February 6, 2015

USD/CAD February 6 at 10:10 GMT

USD/CAD 1.2523 H: 1.2545 L: 1.2373


USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2455 1.2476 1.2504 1.2553 1.2574 1.2602


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza