USD/CAD Soars to a 4-Year High on Canadian Employment Declines
- Canadian net employment declined for the first time in five months
- Canadian unemployment rate rose back to an annual high
- USD/CAD rallies to a 4-year high
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The Canadian Dollar fell to a four year low against the US Dollar, as the unemployment rate returned to an annual high in December.
Net Canadian employment fell by 45.9 thousand jobs in December, disappointing expectations for 14.1 thousand gains in jobs and down from the 21.6 thousand gains in jobs seen in November. Net employment fell for the first time in five months in December, and the decline was the worst in nine months, according to Statistics Canada.
The Canadian unemployment rate rose back to the 12-month high of 7.2% in December, disappointing expectations for unemployment to remain at 6.9%. The 6.9% unemployment rate in November, which was first seen in September, was the lowest unemployment rate in five years. The participation rate was unchanged at 66.4% in December, remaining at the lowest level in more than a decade.
Bank of Canada Governor Poloz said earlier this month that he is most worried about inflation underperformance, and the comment further explained the BoC’s decision last October to no longer mention the possibility of a rate increase. Regarding economic performance, the BoC also said in December that the economy won’t reach full capacity until the end of 2015. Therefore, worse than expected employment may add to pressures for accommodative monetary policies, which is why the Canadian Dollar declined on the release today.
USD/CAD rose 60 pips to a new 4-year high at 1.0946 following the release, which was particularly impressive considering the US Dollar was falling against most currencies at that time because of a simultaneous disappointing US NFP’s release. The third monthly pivot resistance point sits just a few pips below the key 1.1000 level, which may provide resistance.
USD/CAD 1-Minute: January 10, 2014
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .
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