Canada's economy lost 7,400 jobs in June - far less than expected - even as the country continued to struggle through an economic downturn.
The unemployment rate rose to 8.6 per cent - an 11-year high - from 8.4 per cent in May, Statistics Canada said Friday.
“Full-time employment continued its downward trend in June, offsetting gains in part-time,” the federal agency said. “Employment was little changed in June, leaving total net losses during the last three months at 13,000, much smaller than the 273,000 decline in the first three months of the year.”
Most economists had expected 35,000 job losses in June, with the unemployment rate rising to 8.7 per cent.
On Thursday, however, Finance Minister Jim Flaherty warned that job losses are likely to continue for the months ahead.
Most analysts forecast the jobless rate will peak at the mid-nine per cent range some time next year.
“In the months ahead, given the very weak backdrop for the Canadian economy, we expect the negative labour market dynamics to continue and the pace of job losses to remain fairly brisk,” Millan Mulraine, economics strategist at TD Economics, said ahead of Friday's report.
Canada's economy shrank 5.4 per cent in the first quarter of this year, its fastest pace of contraction since 1991. That followed a 3.7-per-cent decline in the fourth quarter of 2008. The Bank of Canada expects the economy to contract a further 3.5 per cent in the second quarter of 2009.
On Wednesday, the International Monetary Fund revised its outlook for the Canadian economy, saying GDP is now expected to contract by 2.3 per cent this year, compared to its earlier forecast of a 2.5 per cent decline. The IMF - which monitors the global economy, and provides financial and technical assistance to its 186 member nations - also raised its forecast for 2010 growth to 1.6 per cent from the 1.2 per cent it had predicted in April.
Visiters Data
Friday, July 10, 2009
Canada sheds 7,400 jobs in June, less than expected
Dollar trades higher on earnings jitters
The dollar climbed Friday as the second-quarter earnings season kicks off and investors continued to move into the safety of the American currency.
The 16-nation euro fell to $1.3947 from $1.4036 late Thursday in New York, while the British pound slid to $1.6192 from $1.6357. The dollar fell to 92.34 Japanese yen from 93.01 yen.
Unrelenting worries over the economy, driven by poor reports on unemployment, consumer confidence and falling commodity prices, have pushed investors into the haven of the dollar and the yen.
Aluminum maker Alcoa Inc. unofficially kicked off the period with better-than-expected results on Wednesday, but a warning from Chevron Corp. late Thursday put investors back on the defensive.
The pace of reports picks up speed next week with results coming in from heavy hitters such as Johnson & Johnson, JPMorgan Chase & Co., Google Inc. and General Electric Co.
Meanwhile, the Commerce Department said Friday the U.S. trade deficit fell to the lowest level in more than nine years in May as exports posted a small gain while the weak American economy pushed imports down for a 10th straight month.
The dwindling deficit reflects the prolonged U.S. recession, which has sharply reduced American demand for imported goods. U.S. exports also are down from last year's peaks, hurting American manufacturers, but those declines have been smaller than the plunge in imports.
Oil prices sank below $60 a barrel Friday on growing pessimism about the economy.
After falling close to $30 per barrel, crude prices had been rising steadily and peaked last week above $73. But dismal jobs numbers suggested energy use will be muted for some time, and prices have tumbled 19 percent since then.
Thursday, July 9, 2009
Canadian Dollar Weakens as Crude Oils Decreases
The Canadian dollar slashed its previous gains as the crude oil fell for a sixth day in a row, on concerns that a longer global slump will damp demand for energy in the U.S., the main destination for Canada’s commodity exportation.
The Canadian currency reached a seven-week low against its U.S. counterpart as its attractiveness declined significantly on concerns that the global slump will be longer than expected, provoking a new wave of pessimism which brought investors to safer positions in the currency market, being the yen, this week’s best performing option so far. The crude oil, Canada’s main export to the U.S. was traded at near $60 in New York, the lowest level since May 26.
USD/CAD traded at 1.1663 as of 23:44 GMT after peaking at 1.1720 in today’s session and remaining stable in the intraday comparison
Yen Drops from Four-Month High on Overprice Speculations
The Japanese yen, which was rallying intensively against all majors after a wave of risk aversion struck markets last week, dropped today as Japanese importers sold the currency led by speculations that after this week’s rally, the yen would be overpriced.
The yen lost today versus all 16 most traded currencies after a Japanese government official affirmed that the current volatility and extreme valuation of the national currency would be unfavorable, stopping immediately the yen’s rally, as investors speculate that the Japanese government may eventually intervene to control further gains of the Asian currency. After speculations appeared last week that the global slump would be deeper and longer, yesterday, the International Monetary Fund predicted a revised global growth for 2010, with rather optimistic figures, encouraging traders to return to higher-yielding options in stocks and in the currency market, consequently damping demand for refuge currencies like the yen and the greenback.
Currency analysts point on charts that the yen’s rally was haste and sharp, and even if being supported by fundamental factors, a correction is a natural consequence after an intense climb. Тhe speculations regarding importers selling the yen to profit also added to the yen’s rally to ease and post the first day of losses since last week’s U.S. jobs report.
Australian Dollar Rises on Better-than-Expected Employment Report
The Australian currency rose against the yen from a seven-week low after a report yesterday indicated that unemployment figures in Australia rose less than forecast, spurring demand for the Aussie, which had lost against all majors since last week’s risk aversion wave.
After losing more than 3 percent yesterday versus the yen and the greenback, the Australian dollar initiated a rebound influenced by domestic and international news. A report yesterday in Australia showed better-than-expected unemployment numbers, which even if still on the rise, did not match rather grim speculations from economic analysts, helping the Aussie to gain. The International Monetary Fund stated yesterday that 2010 global economic growth will be higher than previously suggested, stopping low-yielding currencies like the yen to continue its rally, and finally bringing investors back to higher-yielding positions like Aussie-priced assets, as commodity prices also rebounded slightly this Thursday.
Analysts indicated that fundamental factors, even if not optimal served as an excuse for traders to profit, selling the overpriced Japanese currency and opting back for higher-yielding positions in stock markets and in currencies like the Australian dollar and its Canadian counterpart, which rebounded after severe losses during the past days. The Australian may continue to rebound if positive news, even if slight ones, help risk appetite to rise once again.
Wednesday, July 1, 2009
USD - Dollar Optimism High Following Fed Statements
The USD has begun a rather strong rally during yesterday’s early morning trading hours after the Federal Open Market Committee (FOMC) stated that it may not buy-up further Treasury securities. After climbing to as high as 1.4139 against the EUR the pair now sits near the 1.3950 price level, and seems to have leveled-off. Against the British Pound traders witnessed similar behavior to that of the EUR/USD with a steady climb towards 1.6600 followed by a steady decline back towards 1.6400.
This behavior was likely brought on by a low level of confidence going into the FOMC meeting yesterday which caused a sell-off for the USD. However, with an unexpected show of confidence in the future recovery of the US economy, and statements describing a slowing of the economic contraction, traders viewed the greenback as a solid investment for this turbulent period. As such, the value of the Dollar has been on the rise against almost all the major currencies.
On the other hand, today’s economic calendar is filled with events capable of shifting the momentum into the opposite direction. If the unemployment claims report shows that jobs are still being lost in substantial numbers, and if the Final GDP figures come out worse than expected, this market optimism could suffer a devastating setback. Federal Reserve Board Chairman Ben Bernanke is also due to testify on the acquisition of Merrill Lynch by Bank of America to Congress at 14:00 GMT which will no doubt cause a stir in the forex market directly after his opening statements.
EUR - Euro-Zone Weakens on Poor Data, EUR sees Mixed Results
The EUR began today’s trading session with mixed results against its major currency rivals. Losing ground to the greenback as the US Federal Open Market Committee (FOMC) announced it would not purchase additional Treasury securities, which aroused a surge in the value of the Dollar, the EUR/USD fell this morning towards 1.3950. Contrary to this, however, the EUR witnessed a sharp spike against the Swiss Franc as the Swiss National Bank (SNB) decided to de-value the CHF out of fear of deflation. The pair now trades above 1.5300, up from 1.5000 yesterday.
This week has proven to be a painful trading week for the European currencies as financial data has shown a deepening contraction of the economies in the region. European Central Bank (ECB) President Jean-Claude Trichet warned about budget deficits on Monday while the World Bank declared that the global economic contraction may be worse than conventional forecasts. Tuesday was fraught with a series of poor manufacturing and production reports from Germany and France, and yesterday’s Current Account report only validated Trichet’s earlier estimation that budget deficits were becoming a more looming problem.
From the above information comes a panel of valuations for the EUR which may appear confusing. Against other European currencies, the EUR was largely flat, except for the CHF which was intentionally de-valued. And against the JPY, the EUR has climbed, as the island currency loses strength across the board. Today’s trading will no doubt be dominated by the US Dollar considering its recent surge may come to an end if today’s data proves disappointing. If this is indeed the case, the EUR may find itself on the rebound. Whatever the outcome, today will be a great day for short-term traders as the volatility is certain to be intense.
JPY - Yen Pares Gains as Traders Turn Westward from Europe
After climbing towards important psychological barriers against a number of currencies, the JPY apparently failed to breach on all fronts and is now positioned to lose strength against all of its currency counterparts. Hitting the 95.00 price level against the USD, the pair has now entered an uptrend as the Yen loses out to the Dollar’s recent surge. Against the EUR and GBP traders can see very similar behavior to that of the USD/JPY with a strong uptrend for the JPY followed now by a small, corrective down-tick.
With little news affecting the island currency today, there is a chance that this turn of events was brought on by the relative safety of other assets. With confidence declining across Europe, but gaining strength in the US, measurements of risk aversion and risk appetite appear muted and confused. The aversion to risk throughout the Euro-Zone may have pushed investors into safe-havens, but the strength of the greenback pulled most investors westward to the States instead of Japan. With a number of important manufacturing and inflationary figures being released at the end of Thursday’s session, we may yet see a growth in volatility for the JPY. Traders stay tuned to your calendars today!
Crude Oil - USD’s Surge puts Rising Price of Oil on Hold
The price of Crude Oil was expecting further support yesterday as the USD was being sold off by most investors. The build-up towards the FOMC statement yesterday had many investors anticipating an increase to the purchase of US Treasury securities. When this was not forthcoming, a surge in confidence for the Dollar put Crude Oil’s rebound on hold. The price leveled off around $68.50 a barrel and appears to be standing firm.
The Organization of Petroleum Exporting Countries (OPEC) and the European Union (EU) have recently called for further regulation of the energy market to prevent another bubble from forming in the price of Crude Oil. While stating that recent oil prices are not yet a threat to global economic recovery, the fear of a speculation bubble still looms large in the minds of producers and consumers alike.
With crude inventories in the US shrinking more than anticipated, there is a chance that prices will continue to rise as demand climbs from market optimism and economic growth, and OPEC has even declared that a price range near $80 a barrel is preferable. These factors point to the notion that Crude Oil’s price may stumble across more support in the near future and continue to rise.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4062 1.6551 97.21 1.1058 0.8101 0.8589
1.4031 1.6520 96.99 1.1026 0.8077 0.8555
1.4000 1.6485 96.69 1.0997 0.8050 0.8523
Support 1.3925 1.6411 95.95 1.0923 0.7975 0.8448
1.3896 1.6384 95.63 1.0894 0.7941 0.8413
1.3865 1.6352 95.28 0.0868 0.7912 0.8381
Technical News
EUR/USD
After reaching the 1.4130 level, a technical correction took place today, and the pair is currently traded around the 1.3950 level. However, a bullish cross is taking place at the 4-hour chart’s Slow Stochastic, suggesting that a bullish movement could be initiated. Going long with tight stops might be the right strategy today.
GBP/USD
The cable’s bullish momentum was halted as the pair reached a very strong support level at the 1.6590 level. Currently, a double doji formation seems to be taking place at the daily chart, indicating that a sharp move is expected. As all oscillators on the 4-hour chart are pointing up, it appears that the uptrend could be extended.
USD/JPY
After the “M” formation on the daily chart was completed, the pair has resumed bullish activity and has breached the 96.00 level. It seems that the next strong resistant level is placed at the 97.20 level, which may give traders another opportunity to join the bullish trend.
USD/CHF
The pair saw a remarkable jump yesterday, as it rose over 300 pips in 1 day! However a bearish cross on the 4-hour chart’s Slow Stochastic suggests that a bearish correction might take place today, which could take the pair towards the 1.0850 level.
The Wild Card
Gold
Gold has resumed its bullish trend this week and is currently traded for $935 per ounce. A very distinct bullish channel is formed on the 1-hour chart, and a bullish cross is taking place at the 4-hour chart’s MACD. It seems that this might be a great opportunity for forex traders to join a very popular trend.
Super quiet in the twilight zone
EUR/USD is down 10 pips and USD/JPY is up 10 pips and that’s all there is to report after 2 hours of twilight zone trade. Let’s hope the Asian market has something to do today. JPY crosses might have a modest bid tone after the slight rally on equity markets overnight. On the other hand, if you have an unpleasant chore that you’ve been putting off for the last few days on the excuse that the markets might be just about to move- now’s probably the time to do it.
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