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Canada gained 11.9K jobs in October, a small disappointment. It was expected to show a gain of 15.3K jobs after the huge jump of 59.2K last month. The unemployment rate was expected to remain unchanged at 7.1%, but this surprised with a drop to 6.9% – an unemployment rate unseen in a long time. In recent months, employment data was quite volatile.

USD/CAD traded just under 1.04 towards the publication. It is now under 1.0380.

The participation rate dropped from 66.6% to 66.4% and this explains the drop in the unemployment rate. However, the report is good not only because of the unemployment rate but also due to the composition of jobs: Canada gained no less than 23.4K full time jobs and actually lost 11.5K part time jobs. These are signs of a healthy economy.

The Canadian dollar suffers from the political deadlock in the US: the Canadian economy depends on the strength of the US economy and a weaker economy due to the government shutdown and the fear of a default due to the debt ceiling certainly weigh on the loonie, even if oil prices are doing well.

1.0360 provides some support and 1.0446 is the line to watch on the topside. For more, see the Canadian dollar forecast.

The Bank of Canada will later release its business outlook survey.