The Canadian labor market lost 1500 jobs, a bitter disappointment in comparison to a gain of 27.8K that was expected. On the other hand, the unemployment rate continued to drop and ticked down to 7.7%, from 7.8%, as expected. USD/CAD bounced off the very low levels it reached but then resumed its falls .
This loss of jobs is not in line with the long term trend of improvements. Canada usually enjoys the improvements in the US, it’s neighbor from the south and the main trading partner. The Canadian economy also enjoys higher prices of oil (WTI now at $111), but this has less impact on jobs. But this time, the Canadian labor market took a break and saw losses.
USD/CAD is now trading at 0.9550, after an initial jump to 0.9570 seconds after the publication. Resistance is at 0.96, but the pair didn’t need to reach this level in order to resume its falls. All in all, the situation in Canada is great, as seen in the recent GDP report. Also the drop in the unemployment rate, though expected, is receiving more attention.
Earlier this week, the Canadian dollar enjoyed a positive report from the Richard Ivey School of Business. The purchasing managers’ index jumped from 69.3 to 73.2 points, exceeding expectations that saw a drop to 65.1 points. It also enjoyed the aforementioned surge in oil.
Towards the release, it got a big boost from the retreat of the US dollar across the board. The headlines about a US government shutdown got more scary and this drives the market away from the greenback. While the significance of this matter isn’t too high, the dollar suffers now.
USD/CAD already broke below the 0.96 line and went as low as 0.9521 a few hours before the release of the job figures. 0.95 serves as support. Levels above are 0.96 and 0.97. For more levels and analysis, see the Canadian dollar forecast.
Next week, we have a rate decision in Canada and a double feature trade balance release in the US and in Canada.