06.03.2019: Market disappointed by ADP report (USD, CAD)
Dollar bulls were discouraged by the ADP National Employment Report. Earlier today, the US dollar was extending a rally in anticipation of the government data on the US labor market.
The US currency found support from yesterday’s survey on the US non-manufacturing business activity. The Institute for Supply Management said that its non-manufacturing index suddenly climbed to 59.7, the strongest mark in the recent three months. Analysts expected a more moderate increase.
In response, the US dollar index settled up at the two-week high. However, the index could not jump above the level of 97.00. Apparently, the market has doubts as to whether the US nonfarm payrolls will reveal positive readings.
Today the information provided by the ADP payroll processor raised doubts about solid employment in the US private sector. The number of new jobs in the private sector slowed in February after a spike in January. Analysts had expected employment to climb by 190,000.
Besides, the US trade balance also aroused concerns among investors. In December, the US trade deficit reached its highest level since October 2008. Investors bear in mind Donald Trump’s brave efforts to ensure competitiveness of US goods in the global market. In this context, investors expect the US President to assert his protectionist rhetoric again.
Nevertheless, traders did not stop buying the US dollar against the Canadian dollar. The currency pair rose to 1.3430, the level of the early 2019.
At a policy meeting today, the Bank of Canada took a widely expected decision to keep the key interest rate on hold. However, the regulator changed its rhetoric. A policy statement reads that the policy makers agreed on a cautious approach. The current economic conditions and prospects justify even lower interest rates.
No wonder, such dovish stance of Canada’s central bank alongside the bearish trend in the oil market weakened the Canadian dollar indefinitely.
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