Canadian Dollar Heads Lower Ahead of US, Canada Jobs Data
Scott Smith, Sr. Market Analyst with Cambridge, says Can/US data not in favor of Loonie.
January 9, 2014
By David George-Cosh
TORONTO–The Canadian dollar headed lower against the U.S. dollar Thursday, and remains poised for further losses ahead of a pair of employment reports released on the following day.
The U.S. dollar was recently at C$1.0851 late Thursday, from C$1.0820 late Wednesday, according to data provider CQG.
The Canadian dollar continued to fall against the greenback, as traders maintained their bearish tone on the loonie, pushing the currency to a low last seen back in October 2009.
“The stars have really aligned to the detriment of the loonie,” Scott Smith, senior corporate FX trader at Cambridge Mercantile Group, noting weaker domestic economic data and developments with the Federal Reserve as key drivers weakening the Canadian dollar.
The loonie mostly shrugged off U.S. and Canadian economic indicators released Thursday.
Canadian housing starts fell by 4.1% to an annualized 189,700 in December, a four-month low and a shade under consensus expectations. In the U.S., initial claims for jobless benefits decreased by 15,000 to a seasonally adjusted 330,000 in the week ended Jan. 4.
The U.S. and Canada will release labor figures for Friday, with economists expecting the U.S. to add about 200,000 new jobs in the month, while Canada should see a gain of 14,000 positions.
Strong U.S. labor data should see the greenback trade past C$1.0900, which has garnered a cluster of corporate offers, he said.
Corporate demand is also seen around the mid-C$1.0700 range, an area that could open itself up to traders if the U.S. labor figures disappoint.
But the Canadian dollar remains poised for further weakness, with technical factors showing the U.S. dollar could rise as high as C$1.10 in the short-term.
“At this point right now, it’s the speculative traders that are the key players pushing USD/CAD higher at this point,” Mr. Smith said.