The Canadian dollar was easily the strongest of the majors, rallying no less than 1 percent against the Australian dollar, euro, Swiss franc, US dollar, and New Zealand dollar. The Loonie also gained close to 2 percent versus the Japanese yen and British pound after the Bank of Canada (BOC) left their overnight rate target unchanged at a record low of 0.25 percent at 9:00 ET, and reiterated their plan to hold their target rate in place through June 2010. The central bank’s policy statement was relatively optimistic and didn’t touch upon quantitative easing, which was first brought up in their April Monetary Policy Report. The Bank said that “financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly,” and while “macroeconomic risks are roughly balanced,” they believe that “overall risks to its inflation projection remain tilted slightly to the downside.” All told, the Canadian dollar was able to gain against the US dollar as Canada’s fundamental outlook seems to be much better than that of its neighbor to the south.
On Friday at 7:00 ET, the Canadian net employment change is forecasted to show that job losses totaled 36,500 during May following the surprise improvement we saw in April. Furthermore, the unemployment rate is anticipated to have risen to match April 1999 high of 8.2 percent from 8.0 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Canadian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.