The loonie, as the Canadian dollar is best known, advanced to more than two-week high against its US counterpart, after data showed the US employers added fewer jobs in January than analysts had expected. Meanwhile, loonies demand was supported by lower unemployment level and more full-time employees hired in January.
USD/CAD reached a session low at 1.0969 at 14:17 GMT, after which consolidation followed at 1.0989, losing 0.75% for the day. Support was likely to be received at January 22nd low, 1.0954, while resistance was to be met at February 6th high, 1.1122.
Statistics Canada reported today that 29 400 more Canadians were hired in January, which outstripped analysts’ projections of 20 000 newly-hired employees. The data came after employers hired 44 000 fewer people in December. The increase was mainly driven by more full-time added jobs, whose number advanced to 50 500 in January, after a slump of 56 000 in the previous month. The increase in full-time positions offset a drop in part-time jobs, whose figure declined by 21 100, after a 12 100 gain a month ago.
A separate report revealed that the Canadian unemployment reached 7% in January, exceeding analysts’ expectations of a drop to 7.1% and after December’s reading of 7.2%.
Meanwhile, the US dollar came under heavy selling pressure after a report by the US Department of Labor revealed the non-farm payrolls in the country increased by 113 000 in January, well below experts forecasts of an increase to 180 000 and after US employers added 75 000 jobs a month ago, the smallest change since January 2011. Data showed that the small number of added jobs in January was driven by retailers and government agencies as they have cut payrolls at the fastest pace in more than a year, while at the same time construction companies and manufacturers boosted employment.
A separate report revealed the US unemployment fell to 6.6% in January, while analysts projected the jobless rate will remain steady at Decembers rate of 6.7%. The data made it clear that the unemployment rate reached the weakest level since October 2008, even though more Americans entered the workforce.
The lower-than-expected number of non-farm payrolls in the previous month raised concerns over the uneven recovery of the US economy and fueled speculations that Fed may slow the pace of scaling back stimulus.
Last week, Federal Reserve policy makers reached an unanimous decision to pare back the monthly asset purchases for a second straight meeting by another 10 billion USD. This was the first meeting without dissent since June 2011, as policy makers were brought together by concern over Fed’s swelled balanced sheet which raised risks of asset bubbles.
The Federal Open Market Committee (FOMC) said that it will further reduce its Quantitative Easing program, citing improving labor market conditions and acceleration in US economic growth during the recent quarters.
Elsewhere, EUR/USD hit a session low at 1.3553 at 08;35 GMT, after which consolidation followed at 1.3565, losing 0.19% on a daily basis. Support was likely to be received at February 6th low, 1.3483, while resistance was to be encountered at February 6th high, 1.3619.
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