Canadian Dollar Surges amid Higher Bond Yields, Strong Jobs Report

The Canadian dollar strengthened against its US counterpart to close out the trading week, buoyed by a better-than-expected jobs report and rallying bond yields. Despite some tepid hiccups this year, the loonie has gained about 2% against the greenback so far in 2021. With rising energy prices and the economic recovery advancing, the Canadian dollar might have more room for growth.
According to Statistics Canada, the economy added 259,200 new jobs in February, beating the market forecast of 75,000. This was the biggest increase since September 2020. The unemployment rate fell to an 11-month low of 8.2% last month, which was also better than the median estimate of 9.2%.
Most of the job gains were concentrated in accommodation, food services, and retail as more provinces jurisdictions gradually reopened their economies. But it was mostly part-time employment that contributed to the positive job numbers, adding 171,000 new positions. Full-time employment rose only 88,000.
The labor force participation rate was unchanged at 64.7%, while average hourly wages increased 4.3% year-over-year.
The agency’s Labour Force Survey said in a news release:

February marked 12 months of unprecedented changes in the Canadian labour market resulting from the COVID-19 pandemic. Compared with 12 months earlier, there were 599,000 fewer people employed and 406,000 more people working less than half their usual hours.

In other economic data, wholesale sales ballooned 4% in January, capacity utilization jumped 79.2% in the fourth quarter, and new motor vehicle sales clocked in at 96,000 to kick off 2021.
Earlier this week, the Bank of Canada (BoC) left interest rates unchanged at 0.25% at its March policy meeting. It also maintained its aggressive $4-billion-a-week quantitative easing program. The central bank reaffirmed its commitment to its stimulus and relief efforts until the economy is well underway.
The strengthening bond market contributed to the loonie’s ascent on Friday, with the benchmark 10-year bond yield up 0.11% to 1.554%. The one-year bill picked up 0.04%, while the 30-year bond surged 0.108% to 2.002%.
Although crude oil prices recorded a tepid loss this week, they have soared 37% year-to-date. April West Texas Intermediate (WTI) crude futures tacked on $0.06, or 0.09%, to $66.08 per barrel. Since Canada maintains a current account deficit, the national economy relies on exports for growth. Oil and gas remain the country’s top shipments to foreign markets, so any price change can impact the loonie and the broader economy.
The USD/CAD currency pair tumbled 0.51% to 1.2472, from an opening of 1.2534, at 16:06 GMT on Friday. The EUR/CAD dropped 0.81% to 1.4903, from an opening of 1.5017.
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Original from: www.earnforex.com