Canadian Dollar softens after US NFP drives markets away from CAD
- Canadian Dollar falls across the board on Friday.
- Canada absent from economic calendar until next Tuesday.
- US data broadly misses the mark, particularly in terms of job gains.
The Canadian Dollar (CAD) fell across the board on Friday after US Nonfarm Payrolls (NFP) and wage data gave a wide miss on forecasts, sending the Canadian Dollar into the low end after an early spark. The US’ ISM Services Purchasing Managers Index (PMI) also fell back into contraction territory for the first time since January of 2023.
Canada has no meaningful economic data until next Tuesday’s Ivey PMIs, leaving the Canadian Dollar at the mercy of broader markets on Friday. With bad data from the US dragging down investor appetite for the Canadian Dollar, the CAD is getting battered, falling against all of its major currency peers. Crude Oil prices are also weakening on Friday, dragging the CAD even lower.
Daily digest market movers: US NFP misses mark, inflation uptick hammers CAD appetite
- US NFP shows net job additions of 175K in April, down from the forecast for 243K. The previous month saw an upside revision to 315K from 303K.
- US Average Hourly Earnings also grew 0.2% MoM in April, falling below the forecast of 0.3%.
- The US Unemployment Rate also ticked higher to 3.9% from the previous 3.8%.
- US ISM Services PMI unexpectedly fell below the 50.0 contraction level for the first time in over a year, declining to 49.4 when market forecasts were calling for a slight increase to 52.0 from the previous month’s 51.4.
- ISM Services Priced Paid accelerated to 59.2 from 53.4, keeping inflation fears close to the surface.
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.33% | -0.05% | 0.09% | -0.62% | -0.16% | -0.84% | -0.59% | |
| EUR | 0.34% | 0.30% | 0.43% | -0.27% | 0.21% | -0.48% | -0.24% | |
| GBP | 0.04% | -0.29% | 0.14% | -0.57% | -0.11% | -0.79% | -0.51% | |
| CAD | -0.09% | -0.43% | -0.11% | -0.68% | -0.24% | -0.92% | -0.65% | |
| AUD | 0.62% | 0.27% | 0.57% | 0.70% | 0.47% | -0.21% | 0.03% | |
| JPY | 0.15% | -0.19% | 0.10% | 0.21% | -0.47% | -0.66% | -0.44% | |
| NZD | 0.82% | 0.47% | 0.78% | 0.92% | 0.22% | 0.67% | 0.25% | |
| CHF | 0.57% | 0.24% | 0.52% | 0.65% | -0.05% | 0.43% | -0.27% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical analysis: Canadian Dollar broadly softens on Friday as investors disinterested
The Canadian Dollar (CAD) slumped across the board on Friday, easing around a tenth of a percent against the US Dollar (USD) despite a bullish start to the day. A broad-market recovery for the New Zealand Dollar (NZD) sees the CAD shed a full percent against the Antipodean currency, with an additional eighth of a percent falling to the Australian Dollar (AUD). The CAD is also down around half of a percent against the Euro (EUR).
USD/CAD rallied to the top end of a recent demand zone between 1.3680 and 1.3630 after a quick descent Friday morning into 1.3610. The pair’s downside run proved to be short-lived, and bids are back to challenging chart territory near 1.3700.
USD/CAD hourly chart
USD/CAD daily chart
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.