USD/CAD reaches multi-year highs on better-than-expected US employment data

The loonie, as the Canadian dollar is known declined against its US counterpart, amid better-than-expected US employment data. This reinforced speculations that The Fed will slow its monetary stimulus that tends to weaken the US dollar.

USD/CAD touched a session high at 1.0697 at 15:02, the highest since May 27th 2010, The pair gained 0.42% on a daily basis. Support was likely to be received at December 3rd low, 1.0632, while resistance was to be met at May 27th high, 1.0706.

Automated Data Processing Inc. released a report on the employment change in the non-farm private sector. The results outstripped the analysts forecasts of 170 000 new jobs added in November, with ADP coming with a result which pointed 215 000 new jobs. This is much higher than the preceding value of the upwardly revised number of 184 000 new employees in October. The indicator is calculated according to the same methods the Bureau of Labor Statistics uses and is published every month, two days before the official BLS employment rate statistics.

The US Bureau of Economic Analysis released a report on the US Trade Balance. The data pointed to a larger-than expected deficit, accounting for $40.641 billion in October, compared to $42.969 billion in September, which was a downward revision from $ 41.778 billion. Analysts projections pointed to a $40.200 billion deficit.

In addition, the Institute for Supply Management (ISM) reported that its index, gauging activity in the sector of services in the US, slowed down to a reading of 53.9 in November, after it stood at 55.4 in October. Analysts projections were that the index will decline to 55.0 in November.

A separate report showed a decline in New Home Sales in September to 354 000, short of analysts estimates of 425 000 new homes sold and less than the downward revised number of 379 000 a month ago. However, the New Home Sales increased to 444 000 in November, which is higher than the expected 430 000 and larger than Septembers sales. The indicator actually measures the volume of sales of newly built houses. Released by the U.S. Department of Commerce’s Census Bureau. The new houses research consists of two components: research about sold new houses in areas where a SUP (Special-Use Permit) is required and in areas where it is not. A house is deemed sold, if а payment in advance was made or a contract for sale was signed. The indicator also includes houses, the construction of which hasn’t started yet, but there is an advance payment done or a contract for sale was signed. A house can be put for sale after a SUP has been issued or after the construction works have started for regions, where a SUP is not required, and the house hasn’t been booked or bought yet.

Meanwhile, the Bank of Canada (BoC) left its benchmark interest rate unchanged, which was widely expected among market players and denied speculations that it will hike the rate in the coming months. The BoC, with its recent Governor Stephen Poloz, announced that the main interest rate will remain unchanged at 1%, which was in line with expectations. The central bank confirmed that monetary stimulus is still appropriate, but there are some downside risks to inflation, which seem greater than previously thought. In an accompanying statement the BoC said it considered “that the substantial monetary policy stimulus currently in place remains appropriate.”

Canada reported its first trade surplus in more than a year in October. Last trade surplus was to be seen in April 2011. The Statistics Canada reported that the countrys trade surplus was CAD 0.08 billion in October, compared to a deficit of CAD 0.30 billion in September, whose figure was revised from a previously reported deficit of CAD 0.44 billion.

Canada posted its first trade surplus since April 2012 in October, official data showed on Wednesday. Analysts projected that Canada will post a trade deficit of CAD 0.8 billion in October.

Elsewhere, EUR/USD traded at 1.3597 at 13:03 GMT, gaining 0.06% on a daily basis. Support was likely to be found at December 3th low, 1.3524, while resistance was to be met at December 3th high, 1.3614. GBP/USD hit a session low at 1.6329 at 09:28 GMT, after which the pair consolidated at 1.6362, slipping 0.18%. The pair was trading at 1.6362 by 10:45 GMT. Support was likely to be received at November 29th low, 1.6315, while resistance was to be met at December 3rd high, 1.6437.