Archived IMT (2009.03.13)

CAD drops across the board after Canada's employment drops by 83K (vs. expected -80K) while the unemployment rate jumped to 7.7% from 7.2%, well above the expected 7.4%. I warned in yesterdays IMT against prolonged CAD declines based on worse than expected report, especially as the lag between the US slowdown and the economic damage in Canada continues. Although we could see prolonged declines in the USD vs EUR, GBP, AUD and NOK, the Canadian dollar may struggle ahead, thus, fuelling USDCAD towards 1.2950-1.3000. As long as global equities rally ahead for another 8-10%, this could help CAD offset any declines vs USD, until the next turnaround in equities accelerates USDCAD past the 1.30s. GBPUSD and EURUSD remain on uptrend targeting $1.4130 and $1.3070.