Employment Friday Causes Volatility In Loonie (CAD)!
“Jobs Friday” can be one of the most volatile trading days of the month and this morning it certainly lived up to that billing, especially for the Canadian dollar (AKA Loonie). Not only were the markets to be affected as a whole with the US Non-Farm Payrolls report (see today’s top story for that discussion) but also earlier in the morning Canada released their own employment report.
The headline out of Canada was that the unemployment rate ticked higher to 7.5% from an expected 7.4% expectation so the Loonie sold off an hour before the US NFP! So many in the market were of the belief that a better than expected NFP figure would be good for risk appetite and that the Loonie might reverse as a result.
The NFP number did in fact come in better than expected, showing a gain of 200K. This has been good for stocks and commodities but it has also been driving the US dollar higher! This is a break from the usual expectation and correlations that we might normally expect as risk appetite is usually US dollar negative. So it looks like these correlations may be breaking down a bit but is is likely that the Loonie will close around 1.02 vs. USD.