The US dollar held steady against the Canadian dollar this morning – temporarily ending the yoyo-ing of the past few days – after the US labor market exhibited a stronger-than-expected weekly pulse. As we go to pixels, the greenback is trading at virtually the same level against its northern peer as at the start of the week.
The US Labor Department reported that weekly jobless claims declined another 39,000 last week to 547,000 – beating expectations for a rise back above 600,000 and suggesting the American labor market recovery is strengthening as we reach another post-pandemic low.
Although last week’s figures were revised up, the less volatile four-week moving average also dropped to 651,000 last week, maintaining a two-week trend of decreases there as well.
The same trend is evident in the figures for continuing claims, which fell to 3.67 million during the week ending April 10. However, labor statistics indicate total unemployment insurance claimants – including so called “gig workers” and those receiving other pandemic related or extended benefits – rose nearly half a million by early April to over 17 million.
The US dollar’s movement this week can accurately be described as roller coaster ride. The initial “lift hill” came Monday through Wednesday morning as the big dollar rose to the highest levels against the loonie since early March.
The currency understandably plummeted after the Bank of Canada announced it would begin to taper its asset purchases – decreasing them by 1 billion per Canadian dollars a week because of the “progress toward economic recovery we have already seen.”
Tiff Macklem, the central bank’s governor, also teased that an interest rate hike could come as early as next year.
Indeed, the central bank is the first of any G7 nation to explicitly remove monetary stimulus amidst the current economic recovery from the recession left behind by COVID-19. The move comes as COVID-19 infections across Canada remain on the rise and much of the most populous provinces remain in partial or full lockdown to stop the spread of variants of concern.
On the US side of the central bank world, the Federal Reserve has explicitly stated it expects no rate hikes before 2023 – until the labor market has reached full employment and consumer inflation has consistently hit the Fed’s 2% target.
In a similar vein, earlier this morning the European Central Bank held both interest rates and asset purchases at current levels “…until it judges that the coronavirus crisis phase is over” and to “prevent a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation.”
Next week, attention will shift to several key US releases including durable goods, the first read on first quarter GDP and consumer inflation to end the week on Friday. The Fed will also get its chance to chime in on Wednesday afternoon as well. For now, expectations are for more robust US economic data next week as well.
Market Strategist & Fintech Specialist
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