USD/CAD plunges After Canadian Employment Data Beats, U.S. NFP Misses
- September Net Change in Employment at +67.2K versus +7.5K expected
- USD/CAD tanks after better-than-expected Canadian Jobs’data lifts recovery hopes.
- Check out the DailyFX economic data calendar for market moving releases in the upcoming days.
The Canadian economy created +67.2K jobs in September, far above market consensus of +7.5K, Statistics Canada reported today. Meanwhile, the Unemployment Rate stayed unchanged at 7.0%, in line with expectations, as more people entered the labor force pushing up the participation rate to 65.7% from 65.5%.
The data comes on the heels of a moderately strong job’s report in August that showed the addition of +26.2K new positions following a -31.20K plunge in July.
The September Labour Force Survey Breakdown revealed that full-time employment rose by only +23.0K while part-time positions increased by +44.1K; an indication that the quality of jobs being created may not necessarily be improving.
Taken together with the August Report, the data this month is consistent with an economy that remains on a steady but soft recovery path; after all the average job growth over the last six months stands only at an anemic +12.2k which may not be enough to bolster consumer spending to offset falling investment caused by depressed commodity prices.
All things considered, slack in the labor market, downside risks to the inflation outlook and uncertainty over the country’s non-resource export sector profile, as stressed recently by policy makers, could all prevent the Central Bank from withdrawing policy accommodation anytime soon as the economy recovers from the collapse in oil prices and the complex adjustment takes hold.
Here is what’s driving the Canadian Dollar this morning:
- CAD Unemployment Rate (SEP): 7.0% as expected, from 7.0%.
- CAD Net Change in Employment (SEP): +67.2K versus +7.5K expected, from 26.2K.
- CAD Full Time Employment Change (SEP): +23.0K from +52.2K.
Chart 1: USD/CAD 1-minute Chart Intraday (October 7, 2016)
Even as the NFP Report was expected to hog the headlines, the Canadian Employment report proved to be more important for the USD/CAD pair. Immediately after the Canadian Labor Market Survey release, USD/CAD fell as low as C$ 1.31886 as the strong jobs’ report suggests that the domestic economy recovery continues to be on track.
--- Written by Christopher Vecchio, Currency Strategist and Diego Colman, DailyFX Research
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