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Canadian Dollar Fell despite Strong Domestic Data

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Nov. 9 2015, Published 1:59 p.m. ET

Canadian dollar fell by more than 1%

The Canadian dollar fell against the US dollar on November 6, 2015. The US Dollar Index was trading stronger than the basket of currencies. This was due to a higher-than-expected NFP (non-farm payroll) report. The jobs rose by 271,000 in October. It was above the forecasts of 180,000 jobs. It overshadowed readings below 200,000 jobs in the previous two months.

The unemployment rate is also an important indicator. It’s relevant to the interest rate hike by the Fed. It shifted lower to 5%. The Canadian dollar is a commodity currency. It’s highly correlated with crude oil prices. It has been under pressure amid the ongoing weakness in global commodity prices.

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Strong labor data from Canada

On the Canadian front, labor data came at a positive note. The unemployment rate fell below market forecasts to 7% in October—compared to 7.1% in September. The number of jobs added to the Canadian economy also rose to 44,400 in October—the biggest rise in five months. While part-time employment rose by 35,400 jobs, full-time employment rose by 9,000. The labor force participation rate also rose to 66% in October—compared to 65.9% in September.

Impact on the market

Looking at the ETFs, the iShares MSCI Canada ETF (EWC) and the Guggenheim CurrencyShares Canadian Dollar ETF (FXC) both fell by 0.97% on November 6, 2015.

Canadian ADRs (American depositary receipts) trading in the US markets were on a negative trajectory. Canada-based ADRs, Canadian Natural Resources (CNQ) and Royal Bank of Canada (RY) fell 1.2% and 0.84%, respectively. Bank of Montreal (BMO) also ended on a lower note by 0.43%.

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