The employment statistics continued ahead of the US jobs report on Friday. Today the ADP employment change came in at 103K versus 130K expected. Recall from yesterday the JOLTs job openings showed a greater than expected fall (weaker employment). On Friday the US non-farm payroll data is expected to show a gain of 185K versus 150K last month. The unemployment rate is expected to remain steady at 3.9%.
Also released today was the final Q3 numbers for productivity and labor costs. US revised its labor cost for the 3Q to -1.2% versus -0.9%, while productivity increased to 5.2% from 4.9%. In contrast Canada labor productivity fell -0.8% versus -0.6% expected.
In addition to the data, the Bank of Canada announced its interest rate decision today. The central bank kept rates unchanged as expected at 5.0%. Having said that, the central bank reiterated its readiness to further increase the policy rate if necessary, reflecting a proactive stance in managing economic conditions.
The central bank said that recent data indicates that the Canadian economy is no longer experiencing excess demand, suggesting a shift from previous trends. The BOC has observed signs that its monetary policy is effectively moderating spending and alleviating price pressures, contributing to a slowdown in the economy. This deceleration is helping reduce inflationary pressures across a wide array of goods and services. The Governing Council is focused on achieving further and sustained easing in core inflation to ensure economic stability.
On a global scale, the BOC series economic growth decelerating, and inflation showing signs of easing. In the United States, economic growth has surpassed expectations but is anticipated to weaken in the coming months. Meanwhile, economic growth in the Euro area has been slowing down. The oil market has seen a notable change, with prices now about $10-per-barrel lower than projected in the October Monetary Policy Report (MPR). Additionally, the US dollar has weakened against most currencies, including the Canadian dollar. Domestically, higher interest rates have significantly curtailed spending, as evidenced by near-zero growth in consumption over the last two quarters. Furthermore, the labor market is showing signs of easing, with job creation lagging behind the growth of the labor force.
The price of the USDCAD traded in an up-and-down trading range soon after the announcement (between moving averages), before breaking higher (lower CAD) in North American afternoon trading.
The gains were also helped by a break above the 100-day moving average and 200-hour moving average both near 1.3574 (see green and blue stepped line on the chart below).
The current price is trading at 1.3593. Staying above those moving averages would keep the technical bias tilted more to the upside. A move higher into the new trading date would have traders targeting the 38.2% retracement of the move down from the November 10 high. That level comes in at 1.36224.
USDCAD moves higher and away from it 100-day MA
Looking at the winners and losers in the Forex,, the NZD is the strongest and the EUR is the weakest. The USD shifted more to the upside in the North American session with gains first the EUR and GBP leading the USDs charge. The US dollar rose 0.29% versus the EUR and rose 0.27% versus the GBP.
The US dollar moved higher in the North American session
The dollars moved to the upside came despite the coins in US yields once again:
- 2-year yield 4.595%, +1.18 basis points
- 5-year yield 4.105% -3.3 basis points
- 10-year yield 4.104% -6.6 basis points
- 30-year yield 4.215% -9.1 basis points
Crude oil continued its fall to the downside as a traders focused on slower global growth. German factory orders came in much lower than expected today at -3.7%. With the ADP jobs report coming out weaker, traders took the clues from slower growth. The US weekly oil inventory data showed a bigger than expected drawdown of -4.632 million versus -1.35 million in crude oil inventories. However the products including distilates with a build of +1.267 million, and gasoline with a large build of +5.421% offset the declines in the crude inventories.
US stocks gave up early gains and closed the day lower
- Dow Industrial Average fell -70.13 points or -0.19% at 36054.44
- S&P index fell -17.82 points or -0.39% at 4549.35
- Nasdaq index fell -83.21 points or -0.58% at 14146.70