The US dollar advanced versus the Canadian dollar across the previous week. The US dollar Canadian dollar exchange rate rallied 0.6%, snapping a three-week losing run. The pair closed on Friday at 1.3136 after starting the week at 1.3063. The US dollar is holding steady versus the Canadian dollar at the start of the new week.
The US dollar was broadly out of favour in the previous, week, albeit less so than the Canadian dollar. The US declined versus most of its peers amid a lack of clarity over progress in US — China trade dispute, the Federal Reserve cutting interest rates and a mixed US jobs report.
The US non-farm payroll showed that 128,000 jobs were created in October, well above the 85,000 that analysts had pencilled in. However, unemployment ticked higher to 3.6% and average hourly earnings missed analysts forecasts at 0.2% month on month growth, down from 0.3%. The data indicates that the labour market is struggling to tighten further, a point that has caught the eye of investors and no doubt the Federal Reserve. Investors are assuming that the Fed could adopt a more dovish stance following the readings.
This week investors will continue watching US — China headlines for news as to when the phase 1 trade deal could be signed. Today investors will also be turning towards US factory orders and tomorrow ISM non-manufacturing data. Any underwhelming numbers could send the dollar southwards, as bets would rise on the Fed easing monetary policy again.
Dovish BoC & Dwindling Oil Prices Hit “Loonie”
A more dovish than forecast Bank of Canada and falling oil prices sent the Canadian dollar trending lower across the previous week. Whilst the BoC kept interest rates on hold at 1.75%, the central bank was more cautious over the outlook for domestic growth, citing concerns over weakness in the manufacturing sector. The BoC kept the door open for a rate cut.
The start of the week is quiet as far as Canadian economic releases are concerned. The price of oil could be the principal driver for the Canadian dollar in the early part of the week. The most important reading will be Friday’s job’s figures. These are expected to show the unemployment climbing to 5.7% in October from 5.5% in September. Weakness in the jobs report could drag on demand for the Canadian dollar.
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