AUD/CAD: Anemic Jobs Data and Another Trade Deficit to Weaken the Loonie

The Canadian dollar is deemed to weaken today before its Australian counterpart as economic data from the Maple Leaf weigh on the Loonie’s advances. Canadian employment data from January and trade figures from December are anticipated to be weak and egg investors to do a double take on the Aussie in turn.

The labor market reports from Statistics Canada are bound to show that after two strong months of increases, job gains are anticipated to have faltered at the beginning of the year. The Employment Change report is forecast to show that the Canadian economy added just 4,500 jobs in January, down from a revised 39,800 in the prior month. Economists likewise estimate that the unemployment rate will rise to 7.2 percent from 7.1 percent.

“If we see a little giveback of the strong employment gains of the last two months, we’ll probably see Canada [dollar] weaken off,” says Matthew Perrier, director of foreign exchange at the Bank of Montreal.

Amid an expected narrower deficit in the US trade deficit, the Canadian Trade balance data is forecast for another negative figure for December. A negative number indicates that there were less goods that were exported than imported. The estimated decline in US imports is likely to account for the change in Canadian trade balance, since about 65% of Canadian exports are purchased by the US.

With economic data perceived to be anemic, the Loonie is presupposed to falter today. A buy position is suggested for the AUD/CAD today though it is still advised to keep watch for probable technical price corrections in line with the lower economic growth and inflation forecasts by the Australian central bank.

The RBA predicted “below trend” 2013 growth of about 2.5 percent, compared with around 2.75 percent forecast in November. Consumer prices is also seen to rise 3 percent in the year to June 2013, compared with the 3.25 percent increase it had forecast three months earlier.