On Friday, the U.S. job creation reading for August came in at 156,000, disappointing markets, which had expected 180,000. The letdown increased with unemployment, which rose from 4.3% to 4.4%, and the lack of inflationary pressure in hourly wages. The greenback quickly lost ground against the other major currencies.
Against the euro, the bleeding came to a quick halt when it was learned that the European Central Bank appears hesitant regarding the date for finalizing its quantitative easing program. This type of communication could be interpreted as attempts to slow the rise of the single currency. The EUR/USD pair has gone from 1.0700 prior to French elections to 1.2000 a few days ago (rising EUR).
In contrast, the CAD has continued to climb, propelled by the quite impressive most recent growth data. Our economists now expect five key rate increases by the end of 2018 and a range of 1.2000-1.3000 for the USD/CAD pair for the next 12 months.
In other news, reactions to the sixth North Korean nuclear test are mixed, with the yen up slightly.
This week is likely to be a lively one, with the Bank of Canada’s key rate decision on Wednesday, the European Central Bank on Thursday and Canadian job data on Friday.
Olivier Cosialls
Range of the Day : 1.2340 – 1.2450