Loonie Mixed as BOC Comments and Job Numbers Conflict
Monday 9 December, 2019
Daily Currency UpdateCAD - Canadian DollarThe Bank of Canada maintained its cash rate at 1.75 percent last week. According to the BoC, there is evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years. The BoC clarified though that growth in Canada slowed in the third quarter of 2019 to 1.3 percent, in line with expectations. CPI inflation in Canada remains at the BoC's target, and measures of core inflation are around 2 percent. The Loonie erased more than half of last week's when employment numbers were released. Canada lost 71k jobs in November and the unemployment rate rose by 0.4 percent points to 5.9 percent, which is the highest rate since the 6 percent reported in August 2018. The losses happened mainly in the manufacturing and public administration sectors. The data does not necessarily mirror the BOC decision to hold interest rates, and even though probabilities for a rate cut on Jan's next meeting increased from 5 percent to 12 percent, they are still well below the 55 percent seen three weeks ago. Market Participants look to the Federal Reserve interest rate announcement on Wednesday.
Key MoversThe U.S. Dollar started on a negative foot last week due to disappointing data, with lower than expected ISM numbers (manufacturing and non-manufacturing). However, the employment data from Friday was enough to push the USD and U.S. Rates higher. Non-farm payroll employment rose by 266k in November (above the 181k expected), and the unemployment rate came in at 3.5 percent versus 3.6 percent expected. The Pound rose to its highest level since May against the USD last week as traders banked on what the polls are showing as a Conservative Victory in the U.K. General Election. It reached a 2 and a half year high against the EUR. Markets view a healthy Tory majority as the best outcome for U.K. risk assets, at least in the short term. As it would lead to an orderly withdrawal from the E.U., and the Tory manifesto appears to be more 'business-friendly' than the more left-leaning alternative provided by the Labour Party.
- USD/CAD: 1.3247 - 1.3265 ▼
- EUR/CAD: 1.4650 - 1.4688 ▲
- GBP/CAD: 1.7401 - 1.7490 ▼
- AUD/CAD: 0.9039 - 0.9069 ▼
- GBP/CAD: 0.8678 - 0.8706 ▲