The Canadian dollar attempted to rally today on the back of the relatively positive domestic employment report but failed and logged significant losses. The reason for the unimpressive performance was non-farm payrolls.
Canadian employment rose by 12,000 in August, almost two times the July’s growth of 6,600 and nowhere near the pessimistic analysts’ predictions of a drop by 4,800. Yet this did not prevent the unemployment rate from unexpectedly increasing by 0.2 percentage point to 7.0 percent.
The report caused a rally for the Canadian currency, which was extremely short-lived. The release of US non-farm payrolls and the subsequent speculations about timing of the planned monetary tightening made the trading environment very negative for growth-linked currencies.
Adding to the negative factors affecting the loonie today, futures for crude oil dropped about 2 percent.
USD/CAD gained from 1.3177 to 1.3260 as of 19:27 GMT today. EUR/CAD advanced from 1.4656 to 1.4782. CAD/JPY declined from 91.08 to 89.67.
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