Canadian Dollar Loses on Jobs Report, More Disappointment to Come
Image © Bank of Canada
- Strong run for Canadian employment ends
- CAD underperforms into the weekend
- CAD now more concerned with data than oil prices
The Canadian Dollar on the backfoot as another domestic data disappointment points to further potential weakness in a currency which is increasingly more interested in domestic matters than global oil prices.
The Canadian economy lost 7,200 jobs in March where markets had been looking for an increase of 1,000.
The job losses bring to an end a relatively stellar performance for Canadian employment, with a fall in both part-time and full-time positions playing a role in the disappointing figures.
The numbers ensure the Canadian Dollar is a laggard on global currency markets, falling against most of the majors.
The Canadian Dollar was seen trading lower against the U.S. Dollar with USD/CAD quoted at 1.3394, having been as low as 1.3347 ahead of the data release.
However, broad-based Sterling weakness ahead of the weekend meant the Pound-to-Canadian Dollar exchange rate was quoted lower on the day at 1.7433, having been as high as 1.7525 earlier.
"Canada’s Dollar fell after hiring unexpectedly contracted last month," says Joe Manimbo, an analyst with Western Union. "The fact that hiring has been robust in the months before March suggests any blow to the loonie might only be mild."
The Canadian economy has enjoyed a run of six consecutive months of employment gains in which nearly 300K jobs were added to the total.
"It was little surprise to see a modest give-back of 7K in March," says Andrew Grantham at CIBC World Markets, "nothing lasts forever".
Grantham says the recent outperformance of the labour market relative to the economy looked "a little brisk".
Looking ahead, "further sluggish jobs figures could be on the horizon," says Grantham.
Softer jobs numbers going forward is likely to weigh on the Canadian Dollar we believe, particularly as there is growing evidence the currency is increasingly sensitive to economic data as opposed to movements in oil prices.
The Canadian Dollar has long been correlated to movements in the price of oil, but of late this is no longer the case following the disappointing Canada Q4 GDP data, released on March 01.
"Oil's uptrend is failing to impress the CAD," says Neil Mellor, Senior Currency Strategist with BNY Mellon. Mellor believes market focus has now turned to domestic Canadian growth, and as a result "the odds appear to favour the bears".
This prediction has certainly been reinforced by the market's reaction to today's employment data, as well as the view further soft readings are in the pipeline.
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