The Canadian dollar strengthened against a number of its main counterparts on Friday, after traders of the currency felt relieved as prices of crude oil began to stabilize following sudden declines earlier today. Canadian economic data was mixed today, as upbeat data for business activity and unemployment rate were met with a disappointing number of new jobs.
A decline in prices of a group of major commodities weighed on oil prices for the past two weeks as concerns about economic growth grew to add to fears of a global oversupply of crude oil. An agreement to limit oil production, which was made in November 2016, comes to an end in June, unless the Organization of the Petroleum Exporting Countries and other major producers reached an extension deal.
Anticipation for a meeting that gathers oil ministers of the OPEC countries on May 25 is steadily rising, which led the oil market to be volatile as traders read into the probability of extending OPECâs deal. Maintaining recent gains in oil prices is heavily dependent on reaching a decision to run the limited production agreement for longer.
The marketâs volatility caused a flash crash earlier today, however oil prices managed to stabilize and erase some of their early losses. The Canadian currency is closely tied to oil prices as crude oil is one of Canadaâs largest exports.
On the economic front, Statistics Canada, the nationâs central statistical office, said in a report released at 12:30 GMT today that Canadian businesses hired 3,200 new employees in April from 19,400 in March. The data came short of estimates pointing to a gain of 10,000 new jobs. However, the same report stated that Canadaâs unemployment rate declined to 6.5% last month from 6.7% in the previous month, which beat estimates by 0.2%.
A separate report from Richard Ivey School of Business revealed that an index of purchasing managersâ activity rose to 62.4 in April from 61.1 in March, surpassing expectations by 0.1. A subindex that tracks prices surged to 70.9 last month from 57.0 a month before, which cancelled out declines in other subindexes, including employment and inventories, which retreated 0.2 and 15.2, respectively.
USD/CAD traded at 1.3700 as of 17:20 GMT on Friday from 1.3684 at 14:45 GMT, the pairâs lowest level since May 3. USD/CAD began the day at 1.3752. GBP/CAD was at 1.7752 after reaching down to 1.7728 at 14:45 GMT, the weakest level since yesterday. GBP/CAD started trading today at 1.7774.
If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.