Tradervox (Dublin) - The Bank of Canada meeting had resolved to keep the monetary policy as it projected an exit following positive global economy. However, this week’s jobless claims from the US have indicated that the bad performance indicated last week is reflective of a trend in the economy but not a onetime event. Following the release of the US jobless claims data, the loonie fluctuated against the US dollar increasing by 0.7 percent and later declining. Canadian dollar had increased as the BOC Governor indicated that the exiting from the stimulus program was appropriate.
The jobless claims which came at 386,000 against an expectation of 367,000 forced the Canadian dollar to pare its gains losing 0.2 percent against the dollar to exchange at 99.35 cents per US dollar. The loonie had advanced against the US dollar the strongest on April 17 when it rose to 98.65 cents.
Analysts are now concerned that the current increase in the jobless claims for two weeks in a row indicates a possible trend for the US economy. The dollar fell against the yen after the report but continued to rise against the euro as appetite for riskier assets diminished in the market. For a long time, the jobless claims had been around 367,000 hence shifting to 386,000 this week and 387,000 last week might be indicative of a new trend.
Non-Farm Payrolls report was the first one to signal a change followed by the two jobless claims reports. However, the unemployment rate remained at 8.2 percent but this might change if the current trend continues.
According to Avery Shenfeld, a Chief Economist at Canadian Imperial Bank of Commerce in Toronto, the weaker jobless claims may have caused the loonie’s drop from the previous gains. He added that signs of weakness in US economy have dampened expectations of BOC increasing the interest rate.
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management.
Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox