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CAD up as Canadian Employment Surprises; Empire State Survey

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Rates as of 0500 GMT

Market Recap

CAD is in focus this morning as USDCAD hits a threeyear low lowest since February 2018 highest for CAD. The move started on Friday when Canadian employment data turned out to be much better than expected. There were 259k new jobs in February, much more than the 75k that had been expected. 

And the unemployment rate fell to 8.2 from 9.4, a 100 bps fall instead of the 20 bps decline that was expected to 9.2.  

Of course higher oil prices this morning didnt hurt, with oil rallying on betterthanexpected China data February industrial production and retail sales both beat estimates. But as the bulk of the move came on Friday, that wasnt the main reason. 

With Canadian housing starts and manufacturing sales coming out later today, theres more opportunities for volatility in CAD. I think the figures could beat estimates, as the economic surprise indicator for Canada has been trending upward recently. That would be likely to push CAD higher push USDCAD lower. But there could always be disappointment, too.

The big mystery today is why is AUD the 2ndworstperforming currency when JPY is the worstperforming? Usually a lower JPY is a sign of a riskon environment, in which case AUD would tend to be higher. Thats especially so when the China data was favorable. 

However, not everything in China is favorable for AUD today. The fall in the currency may be connected to the slump in iron ore futures, which fell today as Chinas top steelmaking…

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