Canadian Dollar Falls Even As Employment Grows

The Canadian dollar fell on Friday despite better-than-expected employment data. Other economic reports were not that good, though, and there were other fundamental factors that might have caused the decline.

Canada’s employment grew by 32,300 jobs in March, beating the consensus forecast of a 20,100 increase. The unemployment rate remained at 5.8% and its average level in the first quarter of this year was the lowest since mid-1970s.

Meanwhile, the Ivey PMI ticked up from 59.6 to 59.8, but failed to meet market expectations of a reading of 60.2. Released yesterday, the trade balance deficit widened from C$1.9 billion in January to C$2.7 billion in February, exceeding forecasts.

Another possible reasons for the loonie’s underperformance, besides the disappointing data, was the escalation of conflict between China and the United States. In particular, crude oil felt the brunt of the resulting risk aversion, and the Canadian currency often follows moves of the commodity.

USD/CAD rose from 1.2751 to close at 1.2779. EUR/CAD advanced from 1.5604 to 1.5693. CAD/JPY dropped from 84.21 to 83.61.

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