The Canadian dollar has paused in the Monday session, after posting strong gains on Friday. Currently, the pair is trading at 1.2408, down 0.06% on the day. On the release front, the Bank of Canada releases its quarterly Business Outlook Survey. There are no major releases out of the US. On Tuesday, Canada releases Housing Starts and the US publishes JOLTS Jobs Openings.
Canada’s labor market continues to look red-hot, posting superb December numbers on Friday. The economy added 78.6 thousand jobs, crushing the estimate of 1.8 thousand. In November, the economy added 79.5 thousand. The unemployment rate dropped to 5.7%, down from 5.9% a month earlier. The strong numbers sent the Canadian dollar stronger on Friday. The currency gained 1.4% last week, which marked a third winning week for the rejuvenated Canadian dollar.
The Canadian dollar climbed 2.5% in December, and continues to move higher early in the New Year. Much of the loonie’s climb can be attributed to the rise in oil, which has jumped 6.8% since mid-December. Geopolitical tensions have boosted oil prices, in particular tensions with North Korea and the recent civil unrest in Iran. There is pressure on the Bank of Canada to raise its benchmark rate of 1.0%, which is lagging behind the Federal Reserve rate of between 1.25-1.50%. With the Fed widely expected raise rates in January, the Canadian dollar could lose ground if the BoC fails to respond with a rate hike of its own on January 17. However, the BoC may hold back, as it concerns continue over US threats to dismantle the free trade agreement.