Disappointing employment data could weaken USD

By Staff | May 3, 2016 | Last updated on May 3, 2016
2 min read

The loonie has returned to early July 2015 highs, versus the U.S. dollar. And, if near-term U.S. economic data isn’t well received, there may be further declines in the U.S. dollar’s strength, says Prab Sagoo, associate director at Nasdaq Advisory Services, in his weekly market commentary.

Read: Dips ahead for loonie and USD

As a result, North American energy sectors and the TSX would benefit from tailwinds, he adds.

More highlights

  • This week’s headlines will come at the end of the week in the form of Canadian and U.S. employment readings.
  • GDP for February met expectations, even though it was the first negative reading after four consecutive months of increases. This was due to weakness in manufacturing components, with Canadian non-farm payrolls seeing a decline that was spread across most sectors.
  • There were no central bank moves last week, with the Fed holding steady and the Bank of Japan choosing not to ease further. And, domestically, the Bank of Canada’s Stephen Poloz clarified that another rate cut was very unlikely. For more on this week, read: Australia cuts key interest rate to record low 1.75%
  • The TSX continues to be driven higher by mid and small-cap names, with the TSX Equal Weight Index and TSX Small Cap Index up 15% and 21% YTD respectively at the end of April. In comparison the TSX was +7% YTD, impressive in of itself when comparing to a measly 1% gain by S&P500.
  • Gains here have been heavily influenced by gold, silver and oil stocks. Read: Gold: The ultimate safe haven, or just a shiny metal?
  • Average daily volumes in April for the TSX Composite dipped to 0.87 million shares, down from the share averages seen in February and March, as overall volatility declined.
  • Initial readings for the end of April indicate bearish sentiment continues to wane against Canadian stocks, with TSX Composite short activity possibly dipping back down to end of March lows—bearish bets are getting more expensive to hold by international investors.
Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.