Forex Market: USD/CAD touches one-month lows following strong Canadian jobs data

The loonie, as the Canadian dollar is best known, advanced to the strongest level in a month against the US dollar after data showed the Canadian economy added higher-than-expected number of jobs last month, while unemployment fell to the weakest level in four months. The better-than-projected Canadian data offset a strong US jobs report, which may prompt the Federal Reserve to keep cutting its monetary stimulus program.

USD/CAD touched a session low at 1.0958 at 12:57 GMT, after which consolidation followed at 1.0981, losing 0.5% for the day. Support was likely to be received at March 6th low, 1.0956, while resistance was to be encountered at April 3rd high, 1.1045.

Loonies demand was strongly supported after data by Statistics Canada showed the number of employed Canadians surged by 42 900 last month, the most since August, sharply exceeding analysts projections for a 22 500 gain. In February, the number of employed Canadians dropped by 7 000 from a month ago.

Also fanning positive sentiment, the rate of unemployment fell to 6.9% in March, the lowest in four months, while analysts expected the jobless rate will remain unchanged at Februarys reading of 7.0%.

“Overall it was a strong number with strong details, and that’s positive for Canada,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia, in a Bloomberg phone from Toronto. “What we have left is where that leaves Governor Poloz. Should he sound as dovish as he did the other week on April 16, that will resurge the weakness story. Should he sound quite neutral, that will bring further gains for the Canadian dollar.”

The Canadian GDP grew 0.5% to an annualized 1.61 trillion Canadian dollars (approximately $1.46 trillion) in January, offsetting a 0.5% drop in the previous month and beating analysts’ estimates for a 0.4% gain, a report by Statistics Canada showed on March 31st.

However, the BoC Governor Stephen Poloz commented on March 18th that first-quarter growth may be “softer” than the central bank forecast in January because of inclement weather and a rate cut cannot be ruled out, should the economy falter further. Central banks policy makers are set to reconvene on April 16th.

Meanwhile, employers in all sectors of the US economy, excluding the farming industry, added 192 000 new jobs in March, after a revised 197 000 gain in the precious month that was higher than previously reported. The median experts forecast called for 200 000 new payrolls to be added last month. Jobs creation is considered of utmost importance for consumer spending, which accounts for almost 70% of the US economy.

In 2013, the US added 194 000 payrolls each month on average, while in 2012 the jobs created were 186 000.

The rate of unemployment in the United States came in at 6.7% last month, matching Februarys reading and just shy of analysts expectations for a drop to 6.6%, data by the Bureau of Labor Statistics showed today.

“The labor market is doing fine,” Brett Ryan, an economist with Deutsche Bank Securities Inc., said in a Bloomberg interview ahead of the report. “The trend before we had all these weather issues hasn’t changed much. We’re starting to see a recovery.”

Elsewhere, GBP/USD touched a session low at 1.6556 at 12:25 GMT, after which consolidation followed at 1.6569, losing 0.17% for the day. Support was likely to be received at March 26th low, 1.6510, while resistance was to be met at April 3rd high, 1.6601.