canadian-dollar-coins - CAD

The US dollar is higher against the Canadian dollar on Friday morning ahead of the release of the monthly US no-farm payrolls report as well as the unemployment report for Canada. More broadly, sentiment is strong across markets with both Canada’s TSX and the S&P 500 hitting record highs.

USD/CAD exchange rate was higher by 22 pips (+0.16%) to 1.3308 with a daily range of 1.328 to 1.331 as of 9.30am GMT. USD/CAD finished little changed for a second day running on Thursday, rising just +0.6%. The gains this morning give the currency pair a weekly return of +0.55%

Unemployment rate should stay unchanged while average hourly earnings is expected to increase

The average economist forecast is for the US to have created 160,000 jobs in January, higher than the 145,000 in December but less than the 12-month average of 170,000. The unemployment rate should stay unchanged while average hourly earnings is expected to tick up to 0.3% from 0.1% the prior month.

Expectations are high heading into NFP because other statistics for the US labour market in January have been almost universally strong. On Wednesday, the ADP private jobs report surprised on the upside, showing a 291,000 print when 157,000 had been expected by economists. The employment component of the manufacturing ISM rose slightly, the 4-week jobless claims dropped to 211k from 224k and consumer confidence has hit a 5-month high. Though it is worth noting the employment component of the non-manufacturing ISM fell to a 4-month low.

USD to CAD – US dollar is on course for a fifth straight week of gains against the Canadian dollar

Although, all that could change after the release of monthly employment statistics from both North American countries. The US jobs figure is typically the biggest move between the two, due to the relatively bigger size of the US economy but any surprises out of Canada have the potential to add or detract from the US numbers.

The net change in employment in Canada during January is forecast to be 15,000, down from the 27,300 increase in December. The Canadian unemployment rate is expected to hold steady at 5.6%, while there is no consensus for average hourly wages which last rose 3.84% y/y.


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