The Canadian dollar rallied Friday despite Statistics Canada releasing a sharply weaker employment report. Canada lost 212,800 jobs in January on top of 52,700 jobs losses in December. The losses were concentrated in the retails sectors in Ontario and Quebec, and blamed on stringent coronavirus lockdown measures.
February’s results are likely to be similar which suggests that a post-COVID-19 economic recovery will be delayed. The economic delay will be exacerbated as Canada’s coronavirus vaccination rollout is stalled due to a shortage of vaccines.
U.S. nonfarm payrolls rose a modest 49,000 in January, a vast improvement over the 227,000 job losses in December, and almost exactly as predicted. The details were fairly good with the unemployment rate dropping to 6.3% from 6,7%, while average hourly earnings rose 0.2%. Still, the results encouraged traders to book profits on short-USD dollar positions.
On Friday, EUR/USD traded in a $1.1953-$1.1987range until New York opened then accelerated to close at $1.2049, following the U.S. employment data. The results encouraged traders to book profits ahead of the weekend. The single currency retreated overnight and opened in Toronto at the overnight low of 1.2020. EUR/USD sentiment continues to bearish due to expectations the European Union economic recovery will lag that of the U.S. Expectations for another round of U.S. stimulus is also weighing on prices.
GBP/USD found a top in Asia at $1.3740, then dropped sharply to $1.3684 in early New York trading, due to broad U.S. dollar strength. The downside may be limited in part because of the somewhat bullish Bank of England outlook, last week, and bearish EURGBP technicals.
Global equity indexes, and Wall Street futures are higher as are gold and oil prices. The prospect of a massive U.S. stimulus package continues to underpin prices, and stoke risk appetite.
West Texas Intermediate oil climbed to $57.65/b after closing at $57.09/b. Traders are bullish due to the large U.S. crude inventory drawdowns seen last week, and the ongoing Organization of the Petroleum Exporting Countries and Saudi Arabia production cuts.
There are not any U.S. and Canadian economic data on tap today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
