Canadian Dollar weaker against Pound, US Dollar, higher against Euro

April 7, 2015 - Written by Frank Davies

STORY LINK Canadian Dollar weaker against Pound, US Dollar, higher against Euro

The Canadian Dollar experienced mixed fortunes against its major peers as economic data from rivals both supported and hindered the ‘Loonie’s’ movement. Against the US Dollar, the Canadian currency weakened as oil prices softened and softened against the Pound following the release of stronger than forecast UK services PMI data. Against the Euro, the Canadian currency was higher as investors were disappointed by Eurozone data and ongoing concerns over the Greek situation.

The US Dollar strengthened against most of its major peers as it rallied following the release of last Friday’s disappointing jobs data. The ‘Greenback’ was weakened after the US Labour Department reported that the world’s largest economy created just 126,000 jobs in March, a figure that was well below economist forecasts. It was the first time in over a year that less than 200,000 jobs were created. Today, the US currency rallied as traders deemed that the sharp declines were overdone.

Falling oil prices put pressure on the ‘Loonie’ against the US Dollar and other peers. The fall came after Goldman Sachs said that oil production growth in the USA would remain too strong for prices to make substantial gains.

‘While the decline in the US rig count has been faster than we expected, it remains insufficient in our view to balance the US market in 2016. Prices need to stay low for longer to achieve a sufficient and sustainable slowdown in US production growth,’ said Goldman in a note to clients.

Against the Pound, the Canadian Dollar softened as data released by market research group Markit showed that the UK services purchasing managers index increased to 58.9 last month from a reading of 56.7 in February. Analysts had expected the index to rise to 57.0 in March.
The data marks the 27th consecutive month in a row where the PMI has seen an increase. The service sector comprises 70% on the UK economy. The strong data also saw economists suggest that the economy expanded by 0.7% in the first quarter of 2015, an improvement on the 0.6% increase seen in the final quarter of 2014. The positive data also increased pressure on Bank of England policy makers to hike interest rates.

With little economic news due out of Canada until Friday’s jobs data, the direction of the US Dollar and commodity prices will be the main drivers for the Canadian Dollar’s movements over the coming sessions.

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