News Column

Canadian Dollar Strengthens After Weak US Jobless Claims

August 21, 2014

CANBERA (Alliance News) - The Canadian dollar strengthened against most major currencies in early New York deals on Thursday, as weaker-than-expected US jobless claims last week supported hopes of sustained improvement in the US labour market.

The report released by the Labor Department showed that initial jobless claims in the US fell by slightly more than expected in the week ended August 16th.

The report showed that jobless claims fell to 298,000, a decrease of 14,000 from the previous week's revised level of 312,000.

Economists had been expecting jobless claims to pull back to 303,000 from the 311,000 originally reported for the previous week.

Traders focus on a 3-day annual gathering of central bankers at Jackson Hole, Wyoming that kicked off today. The Fed Chair Janet Yellen will deliver a speech on the labor market on Friday, after the July FOMC meeting's minutes showed that the officials discussed about raising interest rates sooner.

A report from the US Energy Information Administration showed yesterday that US crude oil inventories may have dropped 4.5 million barrels in the week ended August 15, while analysts anticipated a decline of 1.2 million barrels. The EIA report showed US crude oil inventories at 362.50 million barrels, end last week.

The loonie hit 94.74 against the yen for the first time since July 25. The next resistance for the loonie-yen pair may be eyed around the 95.00 region.

The manufacturing sector in Japan continued to expand at an accelerating pace in August, the latest flash purchasing managers' index from Markit Economics revealed - with a score of 52.4.

That handily beat forecasts for a score of 51.5 following the 50.5 reading in July.

The loonie recovered to 1.0950 against the greenback, off early 2-week low of 1.0985. Further gains may take the loonie to a resistance around the 1.09 zone.

The loonie came off from an early low of 1.4568 against the euro, rising to 1.4525. Next key resistance for the loonie may be eyed around the 1.45 level.

The Eurozone private sector growth slowed more than expected in August as manufacturing posted its weakest expansion in 13 months, flash data from Markit Economics showed.

The composite output index fell to 52.8 in August from 53.8 in July. The indicator was expected to fall marginally to 53.4.

The Canadian currency held steady against the Australian dollar, after retreating to 1.0193 from an early 3-day high of 1.0142.

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Source: Alliance News

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