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Canadian Dollar Fell Due to Contrasting Labor Data Release

Labor Data Release: US Dollar Index Rose, Canadian Dollar Fell

(Continued from Prior Part)

Canadian dollar fell by 1.2%

The US dollar-Canadian dollar currency pair is inversely related to the Canadian dollar. It was on an upward trajectory on February 5, 2016. The currency pair rose by 1.2% for the day. The depreciation in the Canadian dollar was due to the release of labor data in Canada and the US. While the US labor data were good, Canadian labor data came out on a disappointing note. It delivered a double blow to the Canadian dollar. The Canadian dollar ended the day at 1.3916. It was close to the day’s high of 1.3920.

Disappointing domestic labor data

Statistics Canada published the employment data for January on February 5, 2016. The report came out on a disappointing note. Unemployment saw a rise of 10 basis points to 7.2%. The number of people employed fell by 5,700 compared to the previous month. The trade balance data were also published on the same day. The trade balance came out better than market forecasts. It fell by 0.6 billion against the market forecasts of a fall of 2.2 billion.

Impact on the market

The iShares MSCI Canada ETF (EWC) was on a downward trajectory after two days of gains. It fell by 1.3% on February 5, 2016. The Guggenheim CurrencyShares Canadian Dollar ETF (FXC) was also trading on a negative note. It fell by 1.2%.

Canadian ADRs (American depositary receipts) trading in the US markets were on a negative bias after the weak employment data release. Canada-based ADRs including Canadian Natural Resources (CNQ) and Suncor Energy (SU) fell by 1.5% and 0.74%, respectively, on February 5, 2016. Royal Bank of Canada (RY) also fell by 0.91%.

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