Canadian jobs didn’t were slightly disappointing, with a smaller than expected gain in jobs. This sent USD/CAD above parity. The battle around parity isn’t over.
Canadian Employment Change showed a gain of 17,900 jobs, worse than last month’s 20,900 gain and the early expectations that stood on 25,900. The unemployment rate remained unchanged at 8.2%. Some economists expected this rate, while others predicted a drop to 8.1%, following last month’s drop in the unemployment rate.
All in all, loonie traders were used to positive surprises with these figures in recent months, and now the results fell short of expectations. This took its toll on the currency:
USD/CAD that stood on 0.9990 before the release, jumped as high as 1.0050, before relaxing at 1.0030. The reaction is still going on. I’ll update this post if necessary.
Earlier this week, USD/CAD parity became a reality, after 20 months. This came after a leap in oil prices and also on the greenback’s weakness at the beginning of the week. After dropping below 1, the pair went as low as 0.9977 but then retreated.
USD/CAD reached 1.01 due to renewed dollar strength. This rise stopped after the Ivey PMI came out better than expected – 57.8 instead of 55.1 points. The turn in the markets near the end of the week sent the dollar down, and USD/CAD fell below 1 once again.
Below 1, the next support line is 0.98, followed by 0.97, which is a strong line. Kathy Lien talked about a correlation between $92 per oil barrel and 0.97 for USD/CAD. This will still take some time, but many factors support the loonie’s strength.
Looking above, greenback strength will meet resistance at 1.02, which was last year’s year-to-date low and then 1.04.
Taking a peak at next week’s calendar, there are quite a few events to move the loonie. I’ll post the outlook during the weekend.
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