Loonie Hit by Canadian Jobs Report
The Canadian dollar which hit parity with its US counterpart last week pulled back after a report that showed that Canadian employers added fewer jobs than had been forecast. The Loonie has gained 4.8% against the greenback so far this year. Despite the loss many believe the loonie is headed for further gains. Samarjit Shankar of Bank of New York Mellon Corp stated, “The Canadian dollar has come a long way since March, and the job number is reason for a pause. You’ll see resistance as you approach parity.” On Friday the Loonie fell as much as 0.6% during the day the largest decrease since March 24. Currently one Canadian dollar fetches 99.42 U.S. cents. Referring to the Canadian jobs report Toronto-based chief economist at Canadian Imperial Bank of Commerce Avery Shenfeld stated, “This is essentially an on-trend report. Had we had a significant retreat in employment, that might have had markets second-guessing the strength of the Canadian economy, but this is within the margin of error in the survey for what the consensus forecast was.” Shenfeld believes the Loonie will strengthen to 98 Canadian cents per U.S. dollar possibly by September. Last month Bank of Canada Governor Mark Carney said he was open to raising rates from 0.25% as soon as June 1st.
Pound Gains on Positive Data
On Friday the pound gained vs. the US dollar and is headed for the second straight week of gains. Producer prices in the UK rose faster than forecast in March adding to the perception that recovery in the UK is gathering momentum. A report by the National Institute of Economic and Social Research showed that GDP had rose0.4% during the first quarter. The Bank of England left rates at historic lows of 0.5%. Harry Adams of Schneider Foreign Exchange said the producer price data “was a nice boost for sterling,” and also said, “The pound may have a good couple of weeks” and may gain to $1.55 next week, should it close above $1.5350 today” In late Friday trading in London the pound gained 0.6% trading at $1.5374.
EU Finance Ministers to Hold Teleconference Sunday
The Greek fiscal crisis continues to pressure the euro and EU finance ministers will hold talks on Sunday to discuss the details of the earlier EU/IMF agreement which established a rescue mechanism for Greece. Also participating in the teleconference will be the European Central Bank and the European Commission. Greece suffered yet another blow last week after Fitch’s ratings agency downgraded Greece to BBB- just above ‘junk’ status and also said further downgrades are possible. Fitch’s outlook for Greece remains negative. Monday may be a pretty exciting day for currency markets!
