The US dollar is down against the Canadian dollar on Monday morning in a modest retreat from two-month highs with no major catalyst. Both Canada and the United States reported employment data above expectations on Friday, leaving the respective currencies in a neutral position.
USD/CAD was lower by 10 pips (-0.08%) to 1.3296 with a daily range of 1.328 to 1.331 as of 9.30am GMT. The currency pair gave up the 1.33 handle in early trading and sat just below it through the morning. The losses detract slightly from the +0.57% gains made across last week.
USD: fifth consecutive weekly gain against CAD
The dollar made a fifth consecutive weekly gain against the Loonie last week, even finishing the week on an upbeat tone with a +0.21% gain on Friday. As of Monday the dollar is giving back a little of the strength gained from Friday’s better than expected US payrolls report. US job growth accelerated at the start of the New Year with 225,000 extra jobs created in January, easily above expectations of 160,000 and a notable pickup from the 145,000 in December. That puts the three-month average back above 200,000 in what many analysts are noting is particularly impressive when the economy is reaching a level of “full employment”.
USD/CAD: CAD benefits from healthier labour market than expected
Canada too reported a healthier labour market than markets had expected but the Loonie was unable to capitalise against the more dominant and heavily traded US dollar. More than double the number of jobs were created in Canada, that’s to say 34,500 instead of 15,000 in January. Given the geographical proximity and the large trade links, Canada’s economy tends to benefit when the US economy is performing well.
A slight uplift off Friday’s lows in the price of oil offered some support to the Loonie at the beginning of the new week. Oil prices were down by 0.30% on Monday after diving over 6% last week. So- called “black gold” has fallen in value by over 15% in the past three weeks. Oil traders are awaiting more information on possible production cuts from OPEC+ which apparently does not yet have the support of Russia, the biggest non-OPEC oil producer in the group.