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USD/CAD Whipsaws after Canadian Employment Numbers Top Consensus

USD/CAD Whipsaws after Canadian Employment Numbers Top Consensus

Diego Colman, Contributing Strategist

Talking Points:

- October Canadian Employment rises by +43.9K, well above expecations of a loss of -15.0K.

- Unemployment Rate holds steady at 7.0% in line with market consensus.

- If you’re looking for trading ideas, check out our Trading Guides.

After a bumper employment report in September, hiring remained strong in Canada last month, an indication that recovery continues to be on course. Statistics Canada reported that the economy added +43.9K jobs in October consistent with a slowly improving labor market that has struggled to churn out a significant amount of employment opportunities throughout 2016.Analysts polled by Bloomberg News had expected to see a loss of -15,000 jobs. Meanwhile, the unemployment rate remained unchanged at 7.0% in line with consensus as the participation rate rose to 65.8% from 65.7% with more people entering the labour force to look for work.

The Labor Force Survey breakdown revealed that full time employment decreased by -23.1Kwhereas part-time positions climbedby +67.1K, a clear sign that that economic conditions do not yet support the creation of high qualitynew jobs. The report also showed that the goods producing sector created +20.7K jobs, while the while the service industry was responsible for +23.4K new payrolls.

Better than expected employment numbers for October will likely persuade the market to scale back calls, at least temporarily, for additional expansionary measures even as the economy remains plagued with soft inflation and anemic growth rates. Nevertheless, the fact that the Canadian economy is struggling to generate full-time employment jobs will continue to be a worrying factor.

Economic data in Canada today, however, is taking the back seat as the October US NFP report and a tightening presidential race dominate market psychology. For the next few days, volatility is likely to be extremely high as we approach November 8, and should be expected to remain elevated thereafter.

Here’s a summary of the data that’s moving the Canadian Dollar this morning:

- CAD Unemployment Rate (OCT): 7.0% versus 7.0% expected, from 7.0%.

- CAD Net-Change in Employment (OCT): +43.9K versus -15.0K expected, from +67.2K.

- CAD Participation Rate (OCT): 65.8% versus 65.7% expected, from 65.7% prior.

Chart 1: USD/CAD 1-minute Chart (November 4, 2016 Intraday)

Immediately after the Canadian job’s report, USD/CAD sank as low C$1.3387 as the acccelartion in hiring in the Canadian economy points to an improving labor market. At the time this writing, however, the USD has erased most losses and the USD/CAD pair was trading close to C$1.3421.

Read more: US Dollar Posts Modest Rally after Another ’Goldilocks’ NFP Report

--- Written by Diego Colman, DailyFX Research

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.