The Canadian dollar has continued to rally against its US counterpart, following on from Friday’s sold gains after a better than expected jobs report which may give the Bank of Canada the option to leave interest rates if need be as the year unfolds
The Canadian economy added 27,00 net new positions in May, marking, which follows April’s solid performance while the unemployment rate fell to a record low of 5.4 percent
“The labour market looks like it is holding up, so I think they (the Bank of Canada) are very comfortable with policy rates where they are,” said Andrew Kelvin, chief Canada strategist at TD Securities.
“The bank has, I think, signaled with a fair bit of conviction that they are very comfortable with the Canadian outlook.” he added.
Chances of an interest rate cut this year have dropped slightly but still remain at more than 80 percent.
New’s over the weekend that US President Donald Trump has decided to withdraw the planned tariffs against Mexico also helped the Canadian dollar as it was feared that the new measures may have hurt the recently signed trade agreement between the US, Canada and `Mexico
Over 2 thirds of Canada’s exports are sent to the US so any issues with the trade deal would have had a profound affect on the Canadian economy.
The oil price has also made a substantial recovery over the last 3 days which has also spelt good news for the loonie as the Canadian economy is closely connected to the price of oil as it is one of the country’s major exports.