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Canadian Dollar Pacing for Third Weekly Decline as Employment Numbers Disappoint

H.S. Borji
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Canadian Dollar Pacing for Third Weekly Decline as Employment Numbers Disappoint

The Canadian dollar faltered on Friday and is pacing for its third consecutive weekly decline, as weak employment figures underscored concerns about the country’s economic outlook.

The loonie, as the Canadian currency is called, declined 0.45 percent to 0.9110 US. The loonie has weakened half a percent the past five days and 1.7 percent over the past three weeks.

The USDCAD pair advanced 0.46 percent to 1.0977 and looks poised to top the 1.10 level for the first time since late-April. The pair is testing the 1.0983 resistance. Initial support is likely found at 1.0905.

The pair is trading 100 pips above its 100-day simple moving average.

In economic data, Canadian employment levels were little changed in July, as gains in part-time work were offset by a huge drop in full-time employment.

Canada added a mere 200 jobs during July, well short of estimates calling for 20,000, Statistics Canada reported today. The gains were solely attributed to part-time employment, which rose 60,000 last month. Full-time employment declined 59,700.

The modest gains come after the economy unexpectedly lost 9,400 jobs the previous month.

Overall employment increased just 0.7 percent over the previous 12 months, official data showed.

The jobless rate fell from 7.1 percent to 7 percent, as fewer people searched for work. The country’s participation rate fell from 66.1 percent to 65.9 percent.

Geopolitical concerns also weighed on the loonie Friday, as the markets continued to assess Russia’s countersanctions against the West. Earlier this week Russia said it would ban agricultural products from the United States and vegetable imports from the European Union. The counter measures are expected to impact the already struggling Eurozone, and could dampen investor sentiment further.

Risk aversion crept back into the financial markets at the end of the week after US President Barrack Obama authorized US airstrikes in Iraq against the Islamic State of Iraq and the Levant, which has captured large swathes of the Arab republic.

Meanwhile, the fragile ceasefire between Israel and Hamas in Gaza ended Friday morning, as air strikes and rocket fire resumed. The carnage has resulted in the death of 1,900 Palestinians. The fighting has resulted in the death of 67 Israelis, all but three of them soldiers.

Energy futures were mixed Friday. West Texas Intermediate for September delivery edged up 23 cents to $97.57 a barrel. Brent crude declined 12 cents to $105.32 a barrel.

After the New Zealand dollar, Canada’s currency has been the worst performing developed nation currency in the past month, declining 1.2 percent according to the Bloomberg Correlation-Weighted Indexes.

The loonie weakened across the board Friday.

The EURCAD surged 0.85 percent to 1.4725, breaching three intraday resistances. Initial support is likely found at 1.4564.

The loonie tumbled against the British pound, as the GBPCAD advanced 0.2 percent to 1.8428. The pair faces initial support at 1.8363, just above the 200-day simple moving average, and resistance at 1.8453.

The Canadian dollar faltered against the yen, as risk aversion propelled safe haven assets. The CADJPY fell 0.65 percent to 92.81. Initial support is likely found at 92.72 and resistance at 93.74.

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