• Canadian Dollar drops for second consecutive day amid higher US Dollar.
• Strong US employment data boosts US Treasury yields, US Dollar.
• In Canada, strong Ivey PMI data eases downside pressure on Canadian Dollar after disappointing labour figures.

The Canadian Dollar (CAD) extends its losses on Friday following Thursday’s pullback to test fresh year-to-date lows. A combination of a stellar US employment report and weak Canadian labor figures have undermined investors’ confidence in an already weak Loonie.

Data released by the US Labor Department on Friday shows the US economy created employment well above expectations in March. Beyond that, wages continued growing at a steady pace, well above levels consistent with the Federal Reserve’s (Fed) 2% inflation target.

These figures pour cold water on market hopes of interest rate cuts in June and endorse the hawkish party of the central bank, which advocates for delaying and downsizing the easing cycle. This has sent US yields higher, dragging the US Dollar up with them.

In Canada, net employment levels have declined against expectations in March. The negative impact, however, has been offset by the strong improvement of March’s Ivey PMI, which has given some support to an ailing Canadian Dollar.