Canadian Dollar Erases Gains Despite Positive Jobs Report

The Canadian dollar enjoyed some positive figures, including a drop in the unemployment rate to 7.2%. However, USD/CAD eventually climbed back above the important 1.0150 line.

The mediocre jobs report in the US sparked a rally in the greenback, and the pair eventually recovered the losses made earlier.

Canadian improvement

Canada’s  unemployment rate dropped from 7.3% to 7.3%. It was expected to remain unchanged. A positive surprise was also seen in the accompanying employment change number: Canada gained 7.3K jobs, better than 5,1K that was expected.

This may not sound like a big difference, but the job gains were mostly full time jobs, and this shows that the economy is quite healthy.

In a sector considered a bit less healthy, the housing sector, Canada also received a positive figure: building permits to rise by only 0.7%, leaped by 7.4%, more than ten times the expected gain. Also last month’s drop was revised to the upside, from -5.2% to -4.4%.

Non-Farm Payrolls Spark

But in Canada’s southern neighbor, the US, things are less rosy: the US economy gained 80K jobs, below the original expectations and the heightened ones that were made after positive figures were released there.

The NFP wasn’t that bad, but it sparked a huge sell off, especially in the euro – forces that were restrained prior to the release were unleashed, and EUR/USD hit a new 2012 low.

USD/CAD Action

The US dollar gained also against other currencies, and the loonie was no exception. USD/CAD, which fought around the 1.0150 line, began climbing higher.

And then, the last Canadian indicator was already weaker: Ivey PMI fell sharply from 60.5 to 49 points, much lower than 55.4 that was expected. While this is a volatile index, the drop below the 50 point line hurt the Canadian dollar.

USD/CAD temporarily breached the 1.02 line in the height of the storm, but didn’t close above it. 1.0193 was the last price, far higher than the low of the week: 1.01.

For more, see the Canadian dollar forecast.