- USD/CAD is back below the 1.2700 level despite strong US jobs data.
- The loonie is deriving support from crude oil prices and strong Canadian data.
After a brief trip above the 1.2700 level in the run-up to the latest US Labour Market Report, USD/CAD is back below the big figure and has recently bounced after printing session lows under 1.2650. The pair currently trades around the 1.2675 mark, up a modest 0.1% or about 10 pips on the day.
Outperforming loonie
Aside from the US dollar, CAD is the next best performing G10 FX currency on the day, owing in no small part to crude oil markets, which are having a blinder on the final trading day of the week; WTI (+2.8% or +$1.75) just hit its highest levels since April 2019 and even managed to cross briefly above the $66.00 level. Petro-linked currencies such as the loonie are of course seeing upside in tandem.
But the loonie is likely also getting a boost from strong data. Canada posted a surprise trade surplus in January of CAD 1.41B. Expectations were for the economy to be in a trade deficit of CAD 1.4B. The surprise surplus owed itself to an 8.1% MoM surge in exports.
Some of this surge was due to temporary factors; Statcan noted that a Canadian airline retired and sold some of its fleet, adding 2% to exports on the month and gold exports to US retail customers also reportedly saw a surge. But the country’s commodity exports remain on a strong footing; the 5.9% increase in energy exports was mainly as a result of higher prices but volumes also rose 1.7% on the month and returned to their pre-pandemic levels.
Moreover, Ivey Business School’s PMI survey for February showed that Canadian economic activity expanded at its fastest pace since last August, with the seasonally adjusted headline PMI rising to 60.0. That marked a strong jump from a reading of 48.4 in January and the first time the index had been above the 50 level in three months. The jump reflected a loosening of strict lockdown measures being implemented in Quebec and Ontario last month as the prevalence of the Covid-19 virus dropped.
Importantly for the loonie, the Ivey PMI employment subindex rose to 54.0 in February from 41.5 in January, implying that employment rose in the month just gone. Strong Ivey PMI data ought to bolster expectations for a strong Canadian Labour Market Report, which is set to be released by StatsCan next Friday.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Latest Forex News
Editors’ Picks
EUR/USD attempts recovery above 1.1950 as US dollar bounce fizzles
EUR/USD is attempting a recovery above 1.1950 ahead of the European open, as the US dollar’s rebound falters amid persistent weakness in the Treasury yields. Easing concerns over EU's covid vaccines rollout and dovish Fed expectations underpin the spot.
GBP/USD recovers to 1.3850 as UK’s optimism offsets USD bounce
GBP/USD recovers to 1.3850, picking up fresh bids heading into the London open. The cheers the UK’s advantage of faster vaccinations and unlock guidelines to shrug off the US dollar’s bounce off late the lowest since late March.
Gold’s path of least resistance appears north, $1798 in sight
Gold is consolidating last week’s rally to two-month highs of $1784, in the wake of the persistent weakness in the US Treasury yields across the curve. However, gold bulls remain motivated, as China steps up bullion imports.
Bitcoin network hash rate drop may not have caused BTC price crash
China’s prominent regions for Bitcoin mining have suffered an electrical grid blackout, causing Bitcoin’s hash rate to decline. Bitcoin price crashed over the weekend, coinciding with the drop of the network’s hash rate.
S&P 500 Week Ahead: Banks beat the street, COIN booms as funds flow to ETFs
Equity markets continue to remain bolstered from all sides as the macro environment produces strong numbers, earnings continue to smash estimates and inflation concerns take a back seat. Earnings season switches from bank stocks to reopening plays.