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Canadian Dollar Fails to Garner Momentum on Stellar Jobs Report, Rising Energy Prices

July 10, 2020 at 16:48 by Andrew Moran

A fan of 100-dollar notesThe Canadian dollar is failing to garner momentum at the end of the trading week, despite a stellar jobs report and rising energy prices. The loonie has rebounded substantially since the market meltdown in March, driven primarily by greater confidence in global financial markets and rallying crude oil prices. Analysts are optimistic of a strong second half for the Canadian dollar, so could it happen?

According to Statistics Canada, the economy added 953,000 new jobs in June, beating the market forecast of 700,000. This represented the largest month-to-month job creation since the agency started monitoring employment in February 1976. This is also a continuation from the impress 290,000 new jobs in May.

The unemployment rate fell to 12.3% last month, down from 13.7% in the previous month. The median estimate was 12%.

As more economies reopen and lift their coronavirus restrictions, companies are restarting operations or rehiring workers. In total, 488,000 full-time jobs were created and 464,000 part-time positions were added. Every industry reported gains, led by wholesale and retail (222,000), food and accommodations (164,000), construction and manufacturing (164,000), and health care and social services (121,000).

The labor force participation rate rose to 63.8%, while average hourly wages advanced at an annualized rate of 6.8% in June.

Energy prices posted modest gains to finish the trading week. September West Texas Intermediate (WTI) crude oil futures picked up $0.49, or 1.24%, to $40.11 per barrel on the New York Mercantile Exchange. August natural gas futures jumped $0.043, or 2.42%, to $1.822 a barrel. Oil and gas continue to be Canada’s top export, so any significant change in prices – high or low – can have an impact on the loonie.

The bond market was mixed as the benchmark 10-year bond edged up 0.004% to 0.538%. The three-year note dipped 0.002% to 0.297%, while the 30-year bond dropped 0.007% to 1.068%.

Next week, the Bank of Canada (BoC) will hold its July policy meeting, where it is widely expected to keep the benchmark interest rate unchanged at 0.25%.

The USD/CAD currency pair surged 0.26% to 1.3626, from an opening of 1.3585, at 16:41 GMT on Friday. The EUR/CAD jumped 0.4% to 1.5392, from an opening of 1.5331.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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