Canadian Dollar Update June 5, 2015 – Canada’s jobs data shines, but US jobs data steals the thunder.
FX Morning Update June 5, 2015
USD/CAD Open: 1.2488-1.2489 Overnight Range: 1.2450-1.2549
The Canadian dollar was rangebound in overnight currency exchange markets. Oil is at $58.24 and gold is at $1,173. US futures are lower. Today, both Canada and the United States release last month’s employment reports.
The short term Canadian dollar technicals are neutral. For today, USD resistance is at 1.2554. Support is at 1.2461.
Canada’s jobs data shines, but US jobs data steals the thunder.
Today, employment reports were released for both Canada and the United States. The US nonfarm payrolls increased by 280,000, beating Wall Street’s consensus of 225,000 handily. Unemployment ticked up from 5.4% to 5.5%, which is a likely result of new people choosing to enter the workforce. Canada’s own job data was extremely strong, with Canada creating 58,900 jobs in May, shattering the expectations of a mere 10,000 found to be the consensus estimate. Unemployment remains at 6.8%. While today’s Canadian jobs numbers were extremely positive and should give the Bank of Canada some more confidence in the Canadian economy, the Bank of Canada play’s it conservatively and we would need several similar data points for a change in tone and to affect the Canadian dollar. This is positive for the Canadian dollar but not a catalyst. As the Bank of Canada will likely persist with a neutral/dovish tone in the short-term, this will continue to be a story driven by the US economy.
Today’s positive US jobs data was a key factor in assessing US economic strength leading up to the Fed’s June 17th meeting. As the US continues using a data-driven approach on the path to normalization, positive data releases such as the May employment report will make the Fed increasingly hawkish. The stronger the US economy gets, the stronger the US dollar will get. However, a June rate raise is still not likely.
Today’s US jobs data is a huge boost to Fed members that are looking toward a rate hike sooner rather than later. Look for this to be a catalyst for the US dollar slowly grinding higher as strong employment data will help signal and prep the market for a rate hike sooner rather than later. The US dollar should continue to rally towards the end of the year as we move closer to an interest rate hike in the US.
Today’s Suggested Range USD/CAD: 1.2450 – 1.2600
Sincerely,
Rahim Madhavji | Knightsbridge Foreign Exchange | Toll-Free: 1-877-355-5239
www.knightsbridgefx.com
Knightsbridge Foreign Exchange has based the opinions expressed herein on information generally available to the public. Knightsbridge Foreign Exchange makes no warranty concerning the accuracy of this information and specifically disclaims any liability for trading decisions based on the opinions expressed and information contained herein. Such information and opinions are for general information only and are not intended to present advice with respect to matters reviewed and commented upon.