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Canadian Dollar Gains Traction Following Strong Employment Report

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USD/CAD fell from session highs over 1.2650 back into 1.2600 following the much better than expected Canadian employment report. The pairing had rallied from 1.2635 to 1.2665 ahead of the data, with last minute short covering driving the move in expectations for a soft outcome. The overnight low near 1.2575, which coincides with the 10-day moving average, and mark initial support.

Canada employment rose 28.7k in March, contrary to expectations for no growth after the 1.0k drop in February. But full time employment fell 28.2k in March after the 34.0k rise in February. Part time hiring rose 56.8k in March after the 34.9k drop in February. Private sector employment rose 19.3k while public sector employment grew 26.5k. Good producing jobs fell 16.5k after the 24.1k drop in February.

Notably, resource sector jobs rose 6.3k in March after falling 16.9k in February and dropping 8.8k in January. Manufacturing fell 2.4k while construction dropped 12.1k. Service producing jobs surged 45.3k after the 23.2k rise in February. The unemployment rate was 6.8% in March, matching February and in line with projections. The participation rate rose to 65.9 from 65.8. Hours worked fell 0.3% month over month in March after the flat reading in February.

Additionally, Canada housing starts surged to a 189.7k unit rate in March, much better than expected from the revised 151.2k rate in February. The details were less upbeat, as multiple urban starts leapt 48.2% to 125.3k units in March. Single unit starts fell 3.4% to 52.2k units.

US data on Friday was in line with expectations. U.S. import prices fell 0.3% in March with export prices up 0.1%. February’s 0.4% gain was revised down to 0.2%. On a year over year basis, prices are down 10.5% year over year versus -9.7% year over year previously. For exports, the 0.1% February dip was revised down to -0.2% but the -1.9% in January was bumped up to -1.8%. Petroleum import prices were up 0.8% from a 5.2% gain previously. Excluding petroleum, import prices were down 0.4% from -0.3%.

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