Canadian Dollar Boosted By Jobs Data, GBP/CAD Exchange Rate Hits 10-day Low

The Canadian dollar posted net gains after the latest Canadian jobs data while the Pound was unable to derive further support from stronger than expected GDP data released earlier on Friday.

The latest Canadian labour-market data recorded an employment increase of 90,400 for April after a 2,200 decline the previous month and compared with consensus forecasts of an increase of around 21,000.

Full-time jobs increased 40,000 on the month with a part-time increase of just over 50,000.

The unemployment rate held at 6.1% compared with expectations of a small increase to 6.2%.

Average hourly earnings increased 4.8% over the year from 5.0% previously and the lowest reading since the middle of 2023, but slightly above forecasts of 4.7%.

CIBC economist Andrew Grantham commented; “Overall, April’s labour force data were certainly better than expected, although the underlying trend remains one of loosening conditions with the unemployment rate still higher than it was at the start of the year and wage pressures beginning to ease.”

Following the data, markets priced in just less than a 50% chance of a June rate cut compared with around 60% ahead of the data.

ING’s base case is that the Bank of Canada will cut rates in June, although strong data could trigger a change of mind.

Earlier, the UK recorded first-quarter GDP growth of 0.6% compared with consensus forecasts of 0.4%.

According to Bank of England (BoE) chief economist Pill, the MPC has sent a relatively clear signal that the bank rate can be cut when there is sufficient evidence of a downward path in persistent components of inflation.

Pill also stated that; “focussing just on the next BoE meeting is a little ill-advised.”

On inflation he added that persistent parts of inflation are falling, but he is concerned about inflation after 2-3 years.

Markets still consider that the BoE is on track for a cut in interest rates by August with at least a 50% chance of a June move.

MUFG senior economist Henry Cook commented; “Today’s figures may give the BoE some pause for thought, but the focus will remain on key upcoming data on inflation and wage growth.”

According to Cook; “Provided that these data points move in the right direction, today’s good news on economic activity in isolation is unlikely to derail initial monetary easing.”