Loonie rises sharply after exceptional jobs numbers
Chinese stocks rose today after the United States imposed additional tariffs on Chinese goods. In China, the Shanghai and A50 indices rose by 3% and 3.6% respectively. The reason for this is that investors still believe that a trade deal between the two countries is possible. In fact, Donald Trump confirmed this in a statement yesterday. Today, China’s senior negotiators will continue meeting their US counterparts in Washington even as they plan on how to respond to US tariffs. In the United States, futures pointed to a lower open, with the Dow shedding 120 points.
The sterling was little moved today after the impressive data from the Office of National Statistics (ONS). The numbers showed that in March, the trade deficit narrowed to $13.65 billion from the previous $14.4 billion. Manufacturing production rose by an annualized rate of 2.6%, which was higher than the expected 1.3%. The industrial production rose by 1.3%, which was higher than the expected 0.5%. The economy increased by 1.8% in the first quarter, which was in line with expectations.
In the United States, data showed that inflation rose by a smaller rate than investors were expecting. In April, the headline CPI rose by 2.0%, which was lower than the expected 2.1% but slightly higher than the previous month’s 1.9%. On a MoM basis, the CPI rose by 0.3%, which was below the expected 0.4%. The closely followed core CPI rose by 2.1%, in line with the expectations. In the month, real earnings declined by 0.4%, lower than the expected 0.2%.
In Canada, employment number were better than expected. In April, the unemployment rate declined to 5.7% from the previous 5.8% while the participation rate increased to 65.9%. The employment change was 106.5K, which was higher than the expected 10K. These numbers showed that the Canadian economy was not as weak as many analysts had expected.
The USD/CAD pair declined sharply to the lowest level since May 1. This was in reaction to the strong Canadian employment data and the weak US inflation. The pair reached a low of 1.3400. On the hourly chart, this price was above the 50-day and 25-day moving averages. The RSI then dropped sharply to below the oversold level while bullish volumes increased. The pair could now continue moving lower to test the important support of 1.3350.
After crossing the upper line of the symmetrical triangle, the EUR/USD pair continued moving up. This trend accelerated after the release of weak CPI data from the US. On the hourly chart, this price is above the 25-day and 50-day moving averages while the MACD has flattened. There is a likelihood that the pair will continue moving higher, to test the important resistance level of 1.1260.
The EUR/GBP pair has been moving up since May 3. Since then, the pair has moved from a low of 0.8490 to a high of 0.0.8633. As the pair has moved higher, it has formed a V-shape. This price is slightly close to the upper line of the Bollinger Bands while the RSI has been relatively unmoved. While a lot could change during the weekend, there is a likelihood that the pair will continue the upward trend to test the important resistance of 0.8700.