Yesterday the Canadian Dollar recorded its largest one-day gain against the US Dollar for almost a year after the Bank of Canada’s new Governor made his first economic announcement.
The Canadian Dollar Exchange Rate was in the region of 0.9810 against the US Dollar as of 14:25 GMT
During his testimony to the House of Commons Finance Committee Poloz asserted: ‘As the world heals, interest rates will rise. It will be consistent with our inflation target, which is to get inflation back up to 2 per cent.’
In the immediate aftermath of these comments the Canadian Dollar fell briefly, but went on to rally against its American counterpart, climbing 0.8 per cent to 97.39 US cents.
Unlike his predecessor Mark Carney, Poloz made little reference to the Canadian Dollar being ‘overvalued’, stating only that he wouldn’t be giving a ‘running commentary’ on the currency’s exchange rate.
The Canadian Dollar continued to gain on its US counterpart ahead of the release of the highly anticipated US non-farm payrolls report, and advanced further after the Canadian unemployment rate unexpectedly declined in May.
Although economists predicted that the Canadian economy would add 15,000 jobs last month, leaving the unemployment rate unchanged, it actually added a whopping 95,000 positions and the nation’s unemployment rate fell to 7.1 per cent from 7.2 per cent.
Canada’s biggest jobs increase for a decade was largely led by full-time employment with an employment surge of 76,700 in sectors like construction and retail.
According to economist Paul Ferley: ‘It’s providing some support to indications we are seeing stronger growth over the first half of this year over the disappointing second half of last year. ‘
The result allowed the Canadian Dollar to push back above 98 US cents
It was a very different story over in the US however, as the unemployment rate defied expectations for stagnation and advanced from 7.5 per cent to 7.6.
This was despite a larger increase in employment than forecast. Although payrolls jumped by 175,000 rather than the 163,000 advance estimated, the employment rate rose from a four-year low.
After the data was published one US-based industry expert commented: ‘Things aren’t weakening in the labour market as much as we’d feared. The unemployment rate rose for the right reason. More folks are coming back into the labour market, or coming in for the first time, but more importantly the economy is able to absorb most of them.’
The jobless rate climbed as the size of the labour force increased by 420,000 – exceeding the 319,000 gain in employment.
March and Aprils payroll figures were also negatively revised.
Additionally, the number of discouraged workers in the US declined to 780,000 in May, its lowest level since 2009.
The Federal Reserve has asserted that it will begin reining in asset purchases once there is substantial improvement in the labour market.
When asked whether he thought the US economy could maintain a recovery without the current level of quantitative easing, economist Ian Shepherdson asserted: ‘They’re going to need a substantial run of data to change course. To actually do it, the economy not only has to be improved, but it has to be improved in such a way that it can take the strain of the new policy. The economy has to be in a position to take it and I don’t think it is just yet.’
Current Canadian Dollar (CAD) Exchange Rates
< Down > Up – Little Changed
The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9810 >
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7405 >
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6300 >
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0358 >
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.2188 >
The Pound Sterling/Canadian Dollar Exchange Rate is currently in the region of: 1.5889 <
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0195 <
The Euro/Canadian Dollar Exchange Rate is currently in the region of: 1.3507 <
The New Zealand Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.8197 <
The Australian Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.9644 <
(Correct as of 14:25 GMT)
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