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Canada Job Data Disappoints; USD/CAD Spikes Briefly Before Retracing

Published February 9, 2018
  • Canadian job numbers came in quite a bit weaker than expected at -88k versus the expected 10k; most of the decline was in part time positions (-137k), while there was an increase in full time (49k). The unemployment rate was worse than expected by 0.1%, at 5.9%. This data momentarily caused the USD/CAD to jump over half a cent to 1.2685 and it has since retraced to 1.2605.
  • The US Congress managed to pass a two-year budget agreement early today, ending a brief partial government shutdown that began at midnight when lawmakers missed a funding deadline. The agreement will boost federal spending by almost $300 billion and suspend the debt ceiling for a year.
  • The yield on 10-year treasury notes crept back towards a four-year high today after the spending bill was passed through US Congress. Analysts have been concerned about the psychological 3% level for 10-year treasuries, suggesting it could be a trigger for investors to move money out of equities and into the safe haven asset. Experts have suggested that strong economic data has increased the risk of inflation, prompting fears that the Federal Reserve would be forced to take a more aggressive stance in tightening monetary policy.
  • Oil prices fell for a sixth consecutive session today and was on track for a weekly loss of around 7.5% as investors continue to worry that increased production may offset the OPEC-led attempt to curb output and re-balance the market. Later today, market participants will have further input on US shale production when Baker Hughes releases its most recent weekly rig count data. Brent crude is down ~1.47% on the day and WTI crude is down ~1.52% trading at $63.85 and $60.22/barrel, respectively.