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The Canadian economy added 419K jobs in July, versus market expectations for an increase of 380K. A better US and Canadian jobs number has helped put a bid into the CAD. Analysts at TD Securities expect USD/CAD to trade below the 1.3350/60 pivot though they look for the 1.3220/30 supports to be formidable.

Key quotes

“The Canadian labour market once again outperformed expectations adding 419K new positions in July (market: 380K), albeit with gains concentrated mostly in part-time employment as the economy added 345K part-time jobs versus 73K full-time ones.” 

“The unemployment rate fell sharply from 12.3% to 10.9% as the increase in the participation rate was smaller than anticipated (up to 64.3% from 63.8%), while average hourly earnings decelerated from +6.8% YoY to +5.7% as more relatively low-earning workers resumed employment. Total hours worked increased by 5.3% m/m, which is slowest pace of the recovery thus far (and down from 9.8% m/m in June).”

“A better jobs print in both the US and Canada has the CAD back to trading on its front foot. We think markets were closing USD shorts ahead of today out of caution that the US data had some downside potential. With that risk not materializing, we think the USD bid now looks tenuous and leaves USD/CAD inclined to trade back below the 1.3350/60 pivot. We expect supports located around 1.3230 to be formidable in the meantime.”