Continuing to appreciate and trading higher now at 1.0433 against the U.S. dollar, the Canadian currency has benefited from an uplifting employment report this morning.  According to Statistics Canada, employment rose by a surprising 30,600 positions in the month of September.  The figure was sweetened by the fact that the national overall unemployment rate ticked lower to 8.4 percent, compared with the 8.7 percent seen in August.  Today’s news is very positive for the economy as it is visual proof that Canada is definitely on the mend from last year’s debacle.  It further hints at the possibility that the Bank of Canada may consider rate increases in the near term – similar to the Reserve Bank of Australia’s decision earlier in the week.  Although we can expect rates to move higher soon, policy makers have made it very clear that the recent RBA decision is not setting a precedent.  Statements from BoC Senior Deputy Governor Paul Jenkins confirm the notion as the central bank figure noted that “one shouldn’t draw a very tight comparison between what’s happening in Australia and Canada”.

What remains worrisome is the current trend of a strong underlying Loonie.  The greenback has already lost close to 20 percent against the Canadian counter since the end of March 2009.  Further appreciation in the currency may choke off early signs of growth as well cause further damage to expansionary possibilities in the medium term.  Nonetheless, speculators will likely toss aside recent comments as prospects for the CAD continue rise, a trend that has been preferred since the summer months.

Tags: Canadian Dollar, Canadian Employment, U.S. Dollar

This entry was posted on Friday, October 9th, 2009 at 1:47 pm and is filed under Canadian Dollar, Economic Indicators, US Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.