Friday, the Canadian dollar edged higher after exhibiting steep losses in the previous session as crude oil recouped its early morning losses amid a firm employment report in the U.S.
Although the price of crude oil was extending losses in the morning amid risk aversion on global growth concerns, it trimmed losses following the better-than expected employment report from the U.S. Light Sweet Crude Oil (WTI) futures for September delivery is presently trading at $87.38 per barrel, up $0.75 a barrel.
Yesterday, oil plunged more than $5 to below $87 a barrel on concerns about the faltering U.S. economic recovery coupled with a strong dollar pulled.
The U.S. Economy added 117,000 jobs in July, a more robust figure than most economists had predicted, according to figures released Friday by the Labor Department.
The job growth was entirely in the private sector, with new 154,000 private sector jobs offsetting a decline of 37,000 government positions lost.
Furthermore, the unemployment rate, measured by a different survey than job growth, ticked down slightly to 9.1 percent, while most economists had expected it to hold level at 9.2 percent.
Canada’s economy also added jobs for a fourth straight month in July, helping the unemployment rate ease to a two-year low of 7.2 percent, official data showed today.
However, most of the 0.2 drop in unemployment was a result of fewer people participating in the labor market. Employment rose by only 7,100 on a seasonally adjusted basis, according to the latest figures from Statistics Canada. More than 28,000 jobs were created the month before.
The Canadian dollar that fell to a 2-day low of 79.71 against the Japanese yen in the Asian session moved in a sideways pattern in the succeeding trading hours. The loonie-yen pair inched higher to 80.96 around 8:30 am ET with 78.70 seen as the next likely support level and 82.70 as the probable resistance.
Japanese leading index improved for the second consecutive month in June, the preliminary estimate from the Cabinet Office showed today. The leading index came in at 103.2 in June, up from 99.4 in May. But it stayed slightly below the expected reading of 103.4.
At the same time, the coincident index rose to 108.6 from 106.1. The consensus forecast called for a reading of 108.7. Meanwhile, the lagging index dipped to 90.1 from 90.4 in May.
The Canadian dollar advanced to 1.3833 against the euro around 8:45 am ET, up from a 1-month low of 1.3933 hit in the Asian session. On the upside, the loonie may find target around the 1.3810 level in near-term.
German industrial production dropped unexpectedly in June, the report released by the Federal Ministry of Economy and Technology showed today. Industrial output decreased 1.1 percent month-on-month in June, reversing last month’s 0.9 percent rise. Economists were looking for a monthly 0.1 percent growth.
The Canadian dollar also erased losses against its US counterpart following the non-farm payrolls data, moving off a fresh 5-week low of 0.9838 to reach as high as 0.9759 around 8:30 am ET. If the loonie strengthens further, it may find target around the 0.9710 level.
Looking ahead, the U.S. Federal Reserve is expected to release its monthly consumer credit report at 3 pm ET. Consumer credit for June is likely to show an increase of $5 billion following a $5.08 billion or 2.5 percent increase in May.