March 8, 2017 – The Canadian dollar held its ground against a broadly firmer greenback yesterday, as domestic data showed a third consecutive monthly trade surplus in January and investors awaited jobs data that could provide further direction.
The Canadian dollar settled at CUS$1.3416 to the greenback, or 74.55 U.S. cents, barely weaker than Monday’s close of CUS$1.3410, or 74.57 U.S. cents.
The currency’s strongest level of the session was CUS$1.3383, while its weakest was CUS$1.3436, just one pip under the nearly two-month low the loonie touched on Friday.
“From here, there’s a lot on the calendar that can still move dollar/Canada to where we see it going, which is the CUS$1.40 level by Q2,” said Eric Theoret, a currency strategist at Scotiabank.
“This week it’s the employment picture and then next week the highlight will be the Fed, obviously.”
Investors will be looking for strong U.S. employment growth in a private payroll provider’s data today and from nonfarm payrolls on Friday to cement the view that the Fed will hike interest rates when it meets next week and pick up the pace of future hikes.
Canadian jobs data is also due on Friday, although the Bank of Canada is broadly seen holding steady on monetary policy despite recent solid economic data.
The CUS$807 million trade surplus reported yesterday slightly exceeded analysts’ forecasts of a CUS$700 million positive balance. Exports rose by 0.5 percent while volumes expanded by 1.0 percent.
“I think it provides some modest encouragement but I think it still leaves the Bank (of Canada) in data watch mode, remaining on the sidelines,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.