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Canadian Dollar the Star After Canada Adds 94k Jobs; Expect Bitcoin at $1,500

 

The Canadian dollar made widespread gains on Friday after Canada announced its largest increase in employment in 6 years. Meanwhile, the Australian dollar fell for a fifth day and cryptocurrencies continue downwards. In the absence of more robust earnings growth, traders shouldn’t expect much from the US dollar, CIBC has said.

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The Canadian dollar was by far the best performer and rallied strongly on Friday after Statistics Canada announced jobs growth for November of 94,000—the largest monthly increase since 2012. That was enough to have Canada’s unemployment rate fall to a record low of 5.6 percent and the Canadian dollar made handsome gains as a result.

USD/CAD fell (the Canadian dollar strengthened) in the hours following the release of StatCan data to C$1.325, from C$1.34. The pair’s losses were compounded by a softer US jobs report, released at the same time as its Canadian equivalent. While the number of new jobs in the US was reasonable, at 155,000, this, as well as average earnings growth (+0.2 percent), fell short of economists’ expectations.

USD to CAD - 3 month chart to 07 Dec
USD/CAD - 3 month chart to 07 Dec

Friday’s numbers keep the Bank of Canada well on course to raise interest rates in January and further ripen the Canadian dollar’s short and medium-term outlooks.

A number of analysts expect the Canadian dollar to rebound next year. On Thursday, it struck an 18-month low of C$1.3445.

On the US dollar, which had a mixed day, investors should favour a “softer view for the time being,” Bipan Rai, CIBC’s head of North American FX, told media outlets.

There was certainly nothing mixed about the Australian dollar, which is making headlines for the wrong reasons. Traders looking at AUD/USD daily charts will now see five red candles in a row thanks to this week’s surprisingly soft GDP numbers and a marked reduction in risk appetite amid a sell-off in global equity markets.

AUD to USD - 3 month chart to 07 Dec
AUD/USD - 3 month chart to 07 Dec

AUD/USD had started the week at 4-month highs near $0.74 but traded as low as $0.7198 on Friday before strengthening towards the day’s end to levels a shade above $0.72.

To nobody’s surprise, cryptocurrency valuations continue to slide.

On Friday, bitcoin touched $3,277 on the Bitfinex exchange, 84 percent lower than last December’s peak of $19,891.

Although bitcoin grabs most of the headlines, it isn’t among the worst performing digital currencies. Consider the likes of ethereum, which sank to a miserable $83—a year ago it traded 17 times higher at $1,424.

“There’s little to prevent bitcoin prices from reaching the continuous mean of $1,500,” Bloomberg’s Mike McGlone said midweek.

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