CAD Rises After Strong Employment Report

The Canadian dollar touched its strongest level against the U.S. dollar in more than three weeks on Friday following surprisingly strong employment and trade data.

Canada’s economy unexpectedly added 53,700 jobs in December, all of them full-time positions, and the unemployment rate edged higher, according to government data. It also posted a trade surplus of C$526 million, its first since September 2014, as exports jumped and imports posted a modest gain. Economists, on average, were expecting declines for both data. “There’s a big response in the Canadian dollar,” said Jimmy Jean, economic strategist at Desjardins. “We tend to take things with a bit of grain of salt and look at the broader trends. But there’s no question if we take everything at face value this is an extremely strong number.”

At 9:17 a.m. ET (1417 GMT), the Canadian dollar was trading at C$1.3208 to the greenback, or 75.71 U.S. cents, stronger than the Bank of Canada’s official close of C$1.3242, or 75.52 U.S. cents.

The Canadian dollar, which was outperforming most of its key currency counterparts, touched its strongest level since Dec. 14, at C$1.3179. Its weakest level of the session was C$1.3268.

The U.S. dollar also strengthened following U.S. jobs data that showed slower job growth, but an increase in wages, setting the economy up for further interest rate increases from the Federal Reserve. Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 8.5 Canadian cents to yield 0.768 percent and the benchmark 10-year falling 46 Canadian cents to yield 1.716 percent.

The Canada-U.S. two-year bond spread was -43.8 basis points, while the 10-year spread was -68.6 basis points.

via Kitco

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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