Loonie falls to 1-week low with jobs data in focus

2019-11-08 15:20:15 GMT (Economies.com)
Loonie falls to 1-week low with jobs data in focus

The Canadian dollar fell against the greenback on Friday, and hit a 1-week low as the US currency surged against most currencies, ahead of important data on the Canadian labor market, which provides insight on the overall economic health of the Canadian economy and the odds of further rate cuts during this year.


USD/CAD rose by 0.3% to $1.3205 (the highest since October 30), after opening at $1.3171, with session-low of $1.3171.


Loonie gained 0.1% against the US dollar yesterday, its first gain in the 4 days, buoyed by oil prices rise to a month-and-a-half high.


The US dollar rose by 0.2% on Friday, to extend its gains for the fifth straight day, and hit a 3-week high of 98.23 points, to reflect the US currency robust performance against a basket of currencies.


This broad rally by the US dollar is due to the trade war risks receding in addition to the continued positive data and the strong US services sector data during October, which indicates that the US Federal Reserve will unlikely cut the interest rates for the fourth during this year.


Bank of Canada (BoC) hinted at the end of the October 30 meeting further rate cuts in line with its forecasts for an economic growth slowdown in the second half of this year, due to the state of uncertainty that cast its shadow around global trade disputes and the continued adjustment in the energy sector.


The bank confirmed closely monitoring the global geopolitical and economic developments to determine the extent of slowdown on the manufacturing and investment sectors through the appropriate course of monetary policy, adding that the economic flexibility will be increasingly tested as trade disputes continue.


The Bank of Canada kept the interest rate unchanged at 1.75%, which was widely expected, as it has raised rates three times in 2018 by 25 basis points each time, emphasizing its confidence in the economic growth path.


While in order to reassess the Canadian interest rate outlook for this year, investors are anticipating the release of the monthly jobs data for October, which is a key gauge of the Canadian economy's health during Q4 this year.


At 12:30 GMT, Canada's new jobs data will be released, with forecasts of the creation of 14.7K new jobs in October vs. 53.7K in September, while the unemployment rate is expected to hold at 5.5%.

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