CAD weakens as jobs data sparks US recession fears
Thursday 6 April, 2023
Daily Currency UpdateThe Canadian dollar lost some of its recent gains and weakened against the USD as it retreated from a seven-week high against the greenback to trade around 1.34690. The CAD dipped despite domestic data revealing the economy added more jobs than anticipated last month. Data released by Statistics Canada showed the Unemployment rate remaining steady at 5% in March, slightly better than the market’s projected rate of 5.1%. The report also showed that the net change in employment for March was 34,700 thousand, exceeding the forecast of 12,000 by analysts. The decline in the Loonie may be a result of concerns over a possible U.S. recession. The Bank of Canada is expected to announce its economic forecasts on Wednesday as well as decide interest rates. Most economists predict that the central bank will maintain its benchmark rate of 4.50% for 2023. The price of oil, one of Canada's leading exports, continues to lend support to the Loonie as West Texas Intermediate oil prices trade near 80.34 a barrel.
Key MoversThe dollar is gaining momentum as the dollar index (DXY) pushes above 102.00 following the release of crucial employment data. According to weekly data released by the US Department of Labor, there were 228,000 initial jobless claims for the week ending on April 1st. This figure comes in higher than the previous week's revised print of 246,000 (originally reported as 191,000). Today's results are below market predictions of 200,000. Despite many global markets being closed, the highly anticipated U.S. non-farm payrolls are scheduled to be released tomorrow. The series of weak economic data has led to traders reducing their predictions on how long the Federal Reserve will keep its policy rates in the restrictive territory. However, concerns about the possibility of a recession are also weighing on investors. The Federal Reserve Bank of St. Louis President, James Bullard, is scheduled to speak later today about what course the Fed will be planning to take.
EUR/USD comes under selling pressure as it trades below 1.08950 after the release of US employment data. Data released today for the eurozone revealed a drop in the EU global construction Purchasing Manager’s Index (PMI). The results came in at 45.0, down from the breakeven point in March of 47.6 and worse than expected 49.1. Country-specific reports for Germany, France, and Italy showed further contraction in the construction sector.
The sterling loses traction as it comes under bearish pressure falling below 1.24700 against the dollar. Earlier this week the pound traded near its highest levels in 10 weeks however, the most recent trading days saw a steady decline. Data released out of the UK revealed a fall in the construction PMI, coming in at 50.7, down from the previous month's 54.6 and worse than the expected figure of 53.5.
- EUR/CAD: 1.4667 - 1.4714 ▲
- GBP/CAD: 1.6748 - 1.6813 ▼
- AUD/CAD: 0.8977 - 0.9051 ▼
- USD/CAD: 1.3449 - 1.3502 ▼