The Canadian job market made a U-turn: a huge loss of jobs was reported, and the unemployment rate jumped back up to 8.6%. USD/CAD leaped after the release, creating a hole in the chart. Note that the rise began before the official release. Was the data leaked?
Canadian Employment Change showed a fall of 43.3K jobs. A small rise of 10K jobs was expected, so this is a big disappointment. This also erases all the jobs gained last month (30.6K) and more. The Canadian Non-Farm Payrolls are falling again, like the American NFP that will be published soon.
This release suggests that the last month’s rise was something temporary, a spike in the job numbers graph, and not a real change. Unemployment rate also disappointed with a rise to 8.6%, 0.1% less than the yearly high of 8.7% recorded in August.
Adding to the negative GDP last month, that didn’t meet expectations, and the dovish rate statement before that, the situation of the Canadian economy isn’t that good.
USD/CAD reacted with a leap that caused a gap in the hourly charts. The rise began before the release. It looks like someone knew that bad news were coming.
USD/CAD rose from 1.0650 to 1.0690 before the release, and then hit 1.0740 right afterwards – a 50 pips gap.
At the time of writing, USD/CAD falls back to 1.0700, still not closing the gap, but calming down before the bigger release: American Non-Farm Payrolls.
On the road north, USD/CAD will meet 1.0870 which was the peak at the beginning of the week. Looking south, 1.0590 is the bottom of the current range.
With Non-Farm Payrolls coming, these lines can be broken easily in any direction. A break might be temporary and related to the crazy market conditions that appear with each NFP release.
Further reading: This week’s USD/CAD Forecast.
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