Canadian Dollar Fails to Keep Up With Rallying Greenback Despite Strong Data

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The Canadian dollar is failing to keep up with the strengthening US dollar on Friday, despite impressive economic data in the Great White North. Although the loonie is poised for a weekly gain against the greenback, it could not maintain the momentum to finish the trading week.

According to Statistics Canada, the Canadian economy added 418,500 new jobs in July, beating the market forecast of 400,000. This is down from the 952,900 new positions that were created in June. The unemployment rate declined to 10.9% last month, coming in slightly better than the median estimate of 11%. The jobless rate was 12.3% in June.

Most of the new jobs were part-time, totaling 345,300. Full-time employment increased 73,200. Employment growth was seen across the board, led by wholesale and retail (101,000), food and hospitality (101,000), construction (34,000), professional and technical services (33,000). Average hourly wages rose 5.7% at an annualized rate, while the labor force participation rate edged up to 64.3%.

Earlier this week, the IHS Markit manufacturing purchasing managers’ index (PMI) was 52.9 in July, up from 47.8 in June – anything above 50 indicates expansion.

Canada’s trade deficit widened to $3.19 billion in June as exports jumped 17.1% and imports advanced 21.8%.

Falling energy prices also hampered the loonie to close out the trading week. September West Texas Intermediate (WTI) crude oil futures tumbled $0.71, or 1.69%, to $41.24 per barrel. Brent crude futures dropped $0.69, or 1.53%, to $44.42 a barrel. Since oil and gas continue to be Canada’s top export, any significant change in prices – high or low – can influence the national economy.

The bond market was mixed on Friday. The three-month note was unchanged at 0.16%, the benchmark 10-year bond was up 0.015% to 0.477%, and the 30-year bond picked up 0.019% to 0.944%.

It was hard for many currencies to make gains against the greenback as the US Dollar Index, which gauges the buck against a basket of currencies, surged to notch a tepid weekly gain. The buck is rallying on a strong jobs report, uncertainty in broader financial markets, and US-China tensions. Typically, whenever there is geopolitical strife or a downturn in the economy, investors seek shelter in safe-haven assets, such as the greenback and gold.

The USD/CAD currency pair rose 0.62% to 1.3392, from an opening of 1.3311, at 18:43 GMT on Friday. The EUR/CAD slipped 0.16% to 1.5781, from an opening of 1.5808.

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