The Canadian Dollar (CAD) advanced against the Pound (GBP) on Friday after economic data showed that unemployment in the North American nation fell close to a six-year low.
According to Statistics Canada, the Canadian economy created 74,000 new jobs last month, beating expectations for an increase of 20,000 jobs. The report also showed that the number of jobs lost came in at 11,000.
The unemployment rate declined to 6.8% last month, the lowest level since December 2008 and was down from the preceding month’s figure of 7%. Economists had been forecasting for the nation’s unemployment rate to remain unchanged.
The report showed that most of the new jobs were created in Ontario, which added 24,700 new positions. The only region, which saw a rise in unemployment, was New Brunswick with its unemployment rate rising 0.9% to 9.6%.
‘All told a strong result, even if the volatility in the detail gives us pause in giving the labour force too much weight in estimating the underlying health of the Canadian jobs market. Today’s data is good for the Loonie and should weigh on fixed income,’ said Nick Exarhos, economist at CIBC WM Economics.
The positive data countered some of the negativity created by previous data releases, which showed that the nation’s trade deficit unexpectedly widened in August and that Growth Domestic Product stalled in July.
Despite the positive report, the Bank of Canada is unlikely to alter its direction for future interest rate hikes. Rates are not expected to rise until mid-2015 at the earliest.
Earlier in the session, the Pound was weakened by the publication of a report, which showed that Construction activity in the UK declined unexpectedly in August. The data compiled by the Office for National Statistics showed that activity fell sharply by 3.9% and declined on a year on year basis for the first time since May 2013.
The report adds to concerns that the UK economy is slowing, and reduced expectations for the Bank of England to raise interest rates.
Canadian Dollar to Pound Sterling Exchange Rate Forecast
The CAD/GBP exchange rates gains are forecast to be relatively short-lived as the Canadian economy remains under pressure from falling commodity prices and will feel the negative impacts of tumbling oil prices. Crude oil is Canada’s most exported commodity.
With US, markets closed on Monday for the Columbus Day celebration trade is likely to be extremely muted.
Tuesday however, will create volatility for the currency pair due to a number of key UK data releases. Inflation, RPI and PPI figures are all due.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5569 ,
Canadian Dollar,,US Dollar,0.8934 ,
Canadian Dollar,,Euro,0.7065 ,
Canadian Dollar,,Australian Dollar,1.0240,
Canadian Dollar,,New Zealand Dollar,1.1396 ,
US Dollar,,Canadian Dollar,1.1192 ,
Pound Sterling,,Canadian Dollar,1.7949 ,
Euro,,Canadian Dollar,1.4123 ,
Australian Dollar,,Canadian Dollar,0.9762 ,
New Zealand Dollar,,Canadian Dollar,0.8765 ,
[/table]
