Loonie gains as Canadian job growth bounces back
The Canadian dollar strengthened slightly against the USD as traders continue to reflect on Friday’s job report. The report showed that the country’s labour market bounced back in December. The economy added more than 35k jobs, which was better than November’s job losses of more than 71k. This was the biggest decline since 2009. The unemployment rate improved to 5.6%, down from the previous 5.9%. Most of the jobs created were tilted towards the construction and food service sectors. The two added 17k and 25k jobs respectively. On a negative note, the country’s average hourly wage growth dropped to 3.8% from 4.35% in November.
The USD weakened slightly against major currencies after the Bureau of Labour Statistics (BLS) released the December jobs numbers. The numbers were relatively disappointing. The economy added just 145k jobs in December. This was lower than the average estimate of 160k and lower than the previous 256k. Wage growth in December also disappointed. The average hourly earnings rose by just 2.9%, below the 3.1% projection. This was the first time wage growth was below 3% since 2018. The unemployment rate remained unchanged at a 50-year low of 3.5% while the U6 unemployment rate of 6.7% was the lowest level since 1994.
Today, the market will receive important economic data from the United Kingdom. The Office of National Statistics (ONS) will release the first reading of Q4 GDP data. The number will provide a preview of how the economy grew in 2019. Traders will also receive the business investment, construction output, industrial production, manufacturing production, and trade numbers from the country. Traders will also receive other important UK data like retail sales and inflation later this week.
The EUR/USD pair started rising on Friday, shortly after the official US jobs numbers. The pair rose from a low of 1.1085 to a high of 1.1128. The price was slightly above the 14-day and 28-day exponential moving averages while the RSI has been rising. The momentum indicator too has risen above the 100 level. The likely scenario is where the pair continues to rise today. If it does, the level to watch will be 1.1150. Another scenario is where the pair resumes the previous decline.
The GBP/USD pair declined today to a low of 1.3032 as traders waited for key data from the UK. The hourly chart shows that the pair has been on a downward trend. The current price is slightly below the 14-day and 28-day exponential moving averages while the RSI has declined slightly. The pair has formed a descending triangle on the hourly chart. There is a likelihood that the pair will have a breakout today.
The USD/CAD pair declined slightly during the Asian session. The pair is trading at 1.3048, which is slightly below Friday’s high of 1.3067. It is also below last week’s high of 1.3105. On the hourly chart, the price is slightly below the middle line of the Bollinger Bands while the RSI has been moving on a downward trend. The price is between the 50% and 38.2% Fibonacci Retracement level. The pair will likely continue moving lower today.