HomeContributorsFundamental AnalysisUSD/CAD Hits 9-Week Highs Despite Strong Canadian Construction Data

USD/CAD Hits 9-Week Highs Despite Strong Canadian Construction Data

USD/CAD continues to strengthen in the Wednesday session. Early in North American trade, the pair is trading at 1.3440. On the release front, it’s a busy day in Canada. Housing Starts improved to 210 thousand, above the estimate of 207 thousand. Building Permits posted a strong gain of 5.4%, beating the forecast of 3.1%. Finally, Labor Productivity, a quarterly release, posted a gain of 0.4% in the first quarter. This matched the forecast. In the US, ADP Nonfarm Employment Change soared to 298 thousand, well above the estimate of 184 thousand. On Thursday, the US releases unemployment claims, with the indicator expected to rise to 239 thousand.

Canada’s employment market has improved in recent months, buoyed by strong employment gains. The economy added 48.3 thousand jobs and 53.7 thousand jobs in December and January respectively. This surprised the markets, which had predicted declines for each reading. The unemployment rate has also improved, dropping to 6.8%. A strong US economy has been good news for Canada, which is heavily dependent on its southern neighbor. At the same time, speculation of an imminent rate hike by the Fed has boosted the US dollar, which has jumped 2.5% against the Canadian currency since the end of February.

Donald Trump and his new administration continues to create controversy on an almost basis, much to the consternation of the markets. Still, the dollar hasn’t skipped a beat and remains at high levels against its major rivals, including the euro. The dollar has benefited from a strong economy and the increasing likelihood of a rate hike at the upcoming Fed policy meeting on March 15. The likelihood of a March hike has jumped to 84%, according to the CME group, compared to 33% just a week ago. We’ll get a look at US Nonfarm Payrolls on Friday, which is expected to soften to 185 thousand. If the indicator beats expectations, the greenback rally could continue and increase the odds of a March rate hike.

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