Canadian Employment Falls Showing Signs of Waning Resilience within the Canadian Economy.
Friday 6 December, 2019
Daily Currency UpdateCAD - Canadian DollarThe loonie this morning sits at a one month higher after Trade Balance Numbers narrowed to -1.08B from previous of -1.23B and signaling Canadian exports making up ground against imports in October. WTI Crude oil topped out at 59.10 yesterday after clarity lacking headlines in a U.S.-China trade agreement with such uncertainty market participants are now looking at North American job numbers for more clues on economic resiliency. Canadian economy in terms of employment was expected to have added 15.9k; the unemployment rate is likely to remain at 5.5 percent for November. The employment figures saw -71k jobs lost, and the unemployment rate rose to 5.9 percent.The data in hindsight is in line with comments made from Deputy Governor Timothy Lane yesterday when he said: "the domestic economy remains resilient thanks to a strong labor market and stable inflation." It was only on Wednesday that the Bank of Canada left interest rates unchanged at 1.75.Looking at the technical level of the USDCAD currency pair, we see first support at 1.3157 and then 1.3114, while immediate resistance is at 1.3201 and then 1.3245. The expected trading range for the USDCAD currency pair today is 1.3140 to 1.3210.
Key MoversToday is a crucial day for forex markets as the monthly jobs report is issued from the States. Data this week from the United States has been weak with Services, Manufacturing, and ADP employment data all missing targets. The consensus is for U.S. Non-Farm Payrolls to post 181k jobs added to the workforce last month, unemployment to hold at 3.6 percent, and hourly earnings to tick up to 0.3 percent from 0.2 percent m/m. Date release well above expected jobs added hit 254K signaling that the U.S. economy is not starting to crack under the pressure of a global slowdown brought upon it by U.S. President Donald Trump's trade offensive against China.On the trade agreement front, Trump is again showing his unpredictability as he stated trade talks with China were "moving right along" only two days after pouring cold water on outlook. We may see phase one of a deal or at least a delay in tariffs rising by the 15th December, which is when the next round of tariff hikes is due. Equity markets around the world are higher as a result. We are noting that both the Aussie and Kiwi dollars are ticking higher heading into the North American session. There is little news from the Eurozone until Thursday's policy decision next week from the European Central Bank, which will be the first chaired by new bank chief Christine Lagarde. No change in policy is expected, so it will be the press conference which will draw the most column inches. USD/JPY 108.55 with EUR/USD hovering around 1.11.
- USD/CAD: 1.3170 - 1.3243 ▲
- EUR/CAD: 1.4609 - 1.4689 ▲
- GBP/CAD: 1.7273 - 1.7405 ▲
- AUD/CAD: 0.8993 - 0.9072 ▲
- NZD/CAD: 0.8618 - 0.8705 ▲