The Canadian dollar fell versus its US counterpart for a third consecutive session on Thursday. The US dollar Canadian dollar exchange rate finished 0.2% higher at 1.3063. The pair is lacking direction in dull trading ahead of key employment data from both US and Canada.
The US dollar advanced in the previous session amid easing geopolitical concerns. US fundamentals were also supporting the dollar. Initial jobless claims rose at a weekly 214k, topping analysts’ expectations, whilst adding to a growing stack of evidence that the US economy is holding up well.
Today investors will be looking towards the US jobs report, the non-farm payroll. Analysts are expecting the number of jobs created in December to hit 164,000, easing back from November’s 226,000 jobs. The unemployment rate is expected to remain unchanged at 3.5%. Meanwhile, analyst expect hourly earnings will increase 0.3% following a 0.2% lift in November. Annually earnings are expected to hold steady and print at 3.1%.
The US jobs report is the most closely watched economic release because it is considered the most complete analysis of the American labour market. The ADP private payroll report is closely correlated to the NFP, although occasionally the two numbers diverge sharply. The ADP report for December was unexpectedly strong raising the probability of a strong December NFP.
The Federal Reserve keep a close eye on the non-farm payroll data. A solid reading could boost the buck. This is because the Fed is more likely to lift interest rates when the labour market is strong.
A Stronger Canadian Jobs Report?
The Canadian dollar was looking sluggish in the previous session, thanks in part to mixed clues from the Bank of Canada’s Stephen Poloz. Whilst on the one hand Stephen Poloz talked of the risks returning to the housing sector, on the other, her also talked of healthy employment and wage growth.
Looking ahead the Canadian jobs reports will be in focus. Analysts are expecting a slight improvement in Canadian Net Change in Employment and Unemployment rate. A strong reading from the Canadian report compared to the US report could lift the Loonie.
