We Expect Weak Canadian Jobs Report After Massive Wildfire
• The CAD weakened against USD as oil prices moved lower and risk appetite waned. Losses for the loonie came one day after it strengthened to a five-week high at 1.2655 as expectations dwindled that the US Federal Reserve will move to hike interest rates again soon.
• Oil prices fell, snapping a three-day rally after notching another 2016 high, as a stronger dollar sparked profit-taking in crude futures. Slippage in global stocks provided an additional headwind for the risk-sensitive commodity-linked Canadian dollar. US stocks retreated after three straight days of gains.
• Statistics Canada showed that Canadian industries ran at 81.4% of capacity in the first quarter, up from 80.9% in the previous quarter and new home prices in Canada rose 0.3% in April from March.
• Canadian employment data for May will be released today (12:30 GMT). The report comes after a massive wildfire last month cut production in Alberta's oil sands region. That’s why we should expect weak figures. The Bank of Canada has said it expects damage from the wildfire to shave 1.25 percentage points off economic growth in the second quarter, which could put the quarter on pace for a contraction.
• Our USD/CAD outlook remains bearish in the long term. Firming economic growth, a recovery in commodities prices and the shift in expectations for monetary policy for both Canada and the United States are still important supportive factors for the loonie.
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• Oil prices fell, snapping a three-day rally after notching another 2016 high, as a stronger dollar sparked profit-taking in crude futures. Slippage in global stocks provided an additional headwind for the risk-sensitive commodity-linked Canadian dollar. US stocks retreated after three straight days of gains.
• Statistics Canada showed that Canadian industries ran at 81.4% of capacity in the first quarter, up from 80.9% in the previous quarter and new home prices in Canada rose 0.3% in April from March.
• Canadian employment data for May will be released today (12:30 GMT). The report comes after a massive wildfire last month cut production in Alberta's oil sands region. That’s why we should expect weak figures. The Bank of Canada has said it expects damage from the wildfire to shave 1.25 percentage points off economic growth in the second quarter, which could put the quarter on pace for a contraction.
• Our USD/CAD outlook remains bearish in the long term. Firming economic growth, a recovery in commodities prices and the shift in expectations for monetary policy for both Canada and the United States are still important supportive factors for the loonie.
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