The Canadian dollar is down 0.2% after trading near its highest level since April of 2015 overnight. The Loonie has been surging for the last couple of weeks on the back of hawkish messaging from the Bank of Canada, as well as strong oil prices. This morning, oil is slightly weaker and some doubt is creeping into the market’s view about the Bank of Canada’s willingness to maintain its hawkish stance. For one thing, on both sides of the border, April jobs numbers were a bust. In the US, April non-farm payrolls were expected to be up 1 million but actually came in at up just 270 thousand. In Canada, the expectation was that the renewed restrictions in large parts of the country would lead to 175 thousand job losses in April but actual losses were 207 thousand. These weak jobs numbers stand in contrast to most other economic signals which suggests a robust recovery and could certainly be a blip. But they are a reminder that an easy recovery is by no means guaranteed and may cause the Bank of Canada to bring its posture on monetary policy closer to the Federal Reserve’s “lower-for-longer” interest rates.
