The Canadian dollar jumped sharply in the early American session, helped by much better-than-expected employment data. Canada’s March employment report released Friday was better than expected. Analysts at the National Bank of Canada note that Canada should not yet claim victory, as new losses are likely in April.
Monthly data released by Statistics Canada showed that the unemployment rate fell in March to its lowest level since the pandemic began at 7.5%, compared with an analyst estimate of 8% from 8.2%. Further details of the jobs report showed that employment increased by more than 300,000 people during this period.
Meanwhile, a barrel of West Texas Intermediate (WTI) crude oil continues to move in the horizontal channel three days ago below $60, without affecting the market value of the Canadian dollar ahead of the weekend.
After rising above 1.2600 earlier in the day, USD/CAD reversed direction as upbeat labor market data from Canada supported the Canadian dollar.
In the early European session, the GBP/USD pair experienced short-term weakness, falling to 1.3670, but recovered slightly in recent trading and looks set to close the week just above the big 1.3700 figure. It looks like the support in the form of the March 25 low came in handy here. This could be the start of a long-term double bottom.
Conversely, if the cable continues to suffer in the coming week and breaks the 1.3670 support level, it could open the door for expanding selling pressure towards the next major support area around 1.3570.
There does not appear to be any fundamental catalyst to explain the recent selling of the pound sterling or why the pound sterling is currently the lagging G10 currency this week.
Indeed, the short-term economic outlook in the UK looks to be among the strongest in the G10, with accelerated vaccine rollouts in the country, lower infection rates, and the country’s progress on a resumption plan as expected – on this last point, UK Prime Minister Boris Johnson announced, that on Monday 12 April the UK will move to the second phase of quarantine relaxation, which will require most businesses to be able to reopen their doors to the public, beyond indoor hospitality. This is expected to give a significant boost to the economy.
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