Canadian Employment Report Will Drive Loonie
The Canadian labour market rebounded sharply in March, according to a broad consensus of market analysts eyeing Friday’s official employment report.
According to forecasts, Canadian employers added more than 25,000 payrolls last month. The unemployment rate is expected to remain unchanged at 7 percent.
March data are expected to confirm the choppy nature of the Canadian labour market. Canada’s labour market shed 7,000 jobs in February, after adding more than 29,000 the previous month. Since August 2013, job creation has been relatively negligible, as the economy continues to trend sideways.
The Canadian dollar continued to strengthen this week, as positive sentiment toward US recovery boosted the outlook on the Canadian economy. Because the US is Canada’s largest trade partner, recovery in the world’s largest economy is associated with higher demand for Canadian products and services.
The Canadian dollar has been trading above 90 US cents since March 27. In Thursday’s mid-day session, the loonie was consolidating at 0.9065 US. The loonie has traded more than 0.3 percent higher versus the greenback over the past month.
The loonie’s near-term outlook will likely be determined by Friday’s employment report. A solid employment report will keep the Canadian dollar elevated heading into the weekend. The Canadian dollar will have several market-moving events to contend with next week, including the central bank’s quarterly business outlook survey and housing data.
In the United States, monthly nonfarm payrolls will also make headlines Friday. Government data could show the US economy added approximately 200,000 jobs last month according to forecasts.