Canadian Dollar bounces from eight-week lows as Middle East peace hopes soothe markets
The Canadian Dollar (CAD) keeps losing ground against the US Dollar (USD) on Thursday, but it has reversed most of the daily losses, as news of a deal between Israel and Lebanon has boosted hopes of progress in the US-Iran peace plan. The USD/CAD pair is trading just above 1.3900 at the time of writing, down from eight-week highs of 1.3925 but still up 0.8% on the week.
Lebanon’s President Joseph Aoun said earlier on Thursday that he is awaiting responses from all parties to an agreement reached with Israel to implement the ceasefire. Investors have reacted with moderate optimism to the news, although risk appetite remains subdued amid a lack of progress in the US-Iran peace process.
US data feeds hopes of Fed tightening
In the macroeconomic domain, recent US data have been Dollar-supportive. On Wednesday, the ADP Employment Change report showed a stronger-than-expected increase in net jobs in May, while the US ISM Services Purchasing Managers’ Index (PMI) revealed healthy business activity and strong price pressures. These figures strengthen the case for a Federal Reserve (Fed) rate hike in the near-term, if inflationary pressures remain at high levels.
The focus on Thursday is on US initial Jobless Claims, although the highlight of the week is Friday’s Nonfarm Payrolls report, which is expected to show that the US economy created 85K new jobs in May and that the Unemployment rate remained steady at 4.3%.
At the same time, Statistics Canada will release May’s Canadian labour market numbers. In this case, net employment is seen increasing by 10K in May, following a 17.7K decline in April, while the Unemployment Rate is expected to remain unchanged at 6.9%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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