- Strong Canadian employment data helps loonie gather strength.
- Annual core CPI in the U.S. comes in at 2.1% as expected.
- US Dollar Index steadies below 97.30.
The USD/CAD pair dropped to its lowest level since May 1 in the early NA session as the upbeat jobs report from Canada helped the CAD outperform its major rivals. However, with the trading action turning subdued as we approach the end of the week, the pair staged a modest recovery and was last seen trading at 1.3415, still losing 0.45% on a daily basis. For the week, the pair is only down around 15 pips.
According to the monthly data published by Statistics Canada, employment increased by 106,500 in April to beat the market expectation for an increase of 10,000 and the unemployment rate ticked down to 5.7%.
Commenting on the market reaction to the labour market data, “While welcome news, the bid in the CAD is unlikely to persist for long without signs of an uptick in virtually all sectors of the economy. We also think the US/China trade impasse will persist for a while which does not bode well for the CAD and broader risk sentiment. As a result, we do not think a dip below 1.34 in USDCAD can persist for long,” TD Securities analysts said.
On the other hand, the greenback came under a renewed selling pressure on Friday despite the inflation figures mostly coming in line with the market expectations and allowed the pair to extend its slide. The US Dollar Index dropped to its lowest level in three weeks at 97.13 today before rebounding to 97.30 and going into a consolidation phase near that level.
Although today’s trade talks in Washington didn’t produce any headlines suggesting that sides are moving closer to finalizing a deal, the 10-year T-bond yield erased its daily losses and turned positive on the day to help the dollar limit its losses against its rivals.
Technical levels to watch for
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