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Canadian unemployment rate fell to 7.9% and 93,200 jobs were gained. This huge surprise sends USD/CAD way down below the support line.

Early expectations saw the unemployment rate unchanged at 8.1%, as it didn’t change last month. Not only did it fall, but it dropped below the round number of 8%. And similar to the leap two months ago, the employment change figure showed a whopping gain of 93,2o0 jobs, more than 5 times the early expectations.

An immediate impact was seen on USD/CAD:

USD/CAD traded at 1.0420 before the release, and struggled with breaking below 1.04. The release sent the pair down to 1.0350, an instant fall of 70 pips, and the move is still on. The next line of support is 1.02, which was the 2009 low and also served as a strong line of support and resistance recently.

This is the sixth month of job gains in Canada, with the last two months being very strong:

Two months ago, Canada saw a huge leap in jobs – 108.7K, more than five times the early expectations. Not only that no correction was seen, last month’s figures also exceeded expectations with a rise of 24.7K jobs, better than 16.8K that was predicted.

The unemployment rate, that dropped to 8.1% two months ago, remained at this level also last month. Even with the recent drop in the American unemployment rate to 9.5%, the gap is still very significant.

Earlier this week, USD/CAD was still trading at a higher range, between the support line of 1.0550 and 1.0680. The loonie suffered from weak data, that kept the pair high. Canadian building permits dropped sharply by 10.8%. While this is always a volatile indicator, the drop was sharp and hurt the loonie.

Also the important Ivey PMI dropped from 62.7 to 58.9 points, when expectations stood on a rise. This added to the disappointment.

But later in the week, weak American figures sent the pair below 1.0550 and towards 1.04, which is a strong line of support, that the pair didn’t manage to break.

This isn’t the last Canadian figure this week – housing starts, which unexpectedly dropped to 189K last month, are predicted to recover and rise back up to 193K.

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