The Canadian dollar will be in focus today, ahead of employment data from the country.
Context: The loonie retreated versus the US dollar on Thursday, after surging to a two-week high initially in the session.
Details: The loonie initially spiked against the greenback as the market tone remained positive after the US released stronger-than-expected data on initial jobless claims. Although 1.31 million people filed for jobless benefits last week, this was much lower than the expectations of 1.375 million.
The USD/CAD forex pair managed to recover later in the session as the greenback gained ground versus a basket of major currencies with crude oil also coming under pressure.
The mood of the market changed later as investor focus shifted to the rising covid-19 cases in the US, with more than 60,000 new infections on Wednesday. Renewed concerns over a potential lockdown pushed investors towards safe-haven options, supporting the US dollar.
Meanwhile, Canada’s finance department projected the country’s budget gap to reach C$343.2 billion in fiscal 2020-21. This will be Canada’s largest deficit since World War II.
The Canadian dollar also came under pressure after WTI crude oil declined below the $40 level on Thursday, as crude is one of Canada’s main exports.
The USD/CAD closed at $1.3586 on Thursday, with the forex pair rising by 0.3% to $1.3631 during the European session.
What to watch: Investors await employment change and unemployment rate data from Canada. The Canadian economy is expected to add 700,000 jobs in June, versus 290,000 jobs in May. The unemployment rate, which increased to 13.7% in May, is projected to decline to 12% in June.
Markets will continue to assess the coronavirus figures, with total cases surging to 12,270,170 globally.
Other Markets: European indices were trading lower at 8:30am GMT, with the FTSE 100, French 40 and Dax 30 index down by 0.7%, 0.7% and 0.5%, respectively.