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Canadian Employment Paints Choppy Picture for Bank of Canada’s Next Move

Canadian Employment Paints Choppy Picture for Bank of Canada’s Next Move

Dylan Jusino, Contributor


Talking Points:

- Unemployment is just a notch lower at 6.2% compared to analysts estimates at 6.3%.

- Net change in Canadian employment for August came in line at 22.2k.

- Part-time employment soars to 110.4k, full-time employment -88.1k.

- Chop in the Loonie puts it at the pre-data level of 1.2093.

See our longer-term forecasts for the US Dollar, Euro, British Pound and more with the DailyFX Trading Guides

The Bank of Canada (BoC) will probably overlook today’s mixed jobs reports at their October interest rate announcement. Unemployment ticked slightly lower at 6.2% compared to expectations at 6.3%. But the change was laregy due to a strong increase in part-time employment by 110.4k compared to -24.3k previously. Conversely, full-time employment change in August decreased by -88.1k versus +35.1k in July. Capactity utilization came in line with analyst’s estimates at 85% versus 83.2% previously (revised down by 0.1%). The net change in employment was 22.2k beating the estimated 15.0k figure.

As we come off of the surprise rate hike from the BoC, it is unclear what this might be mean for their October interest rate decision. We may be able to attribute the decline full-time and part-time employment changes to seasonality particularly in the retail industry. However, one of the more concerning implications is what this might mean for Canadian consumer spending and income growth. Less full-time employees may point to softer consumption going forward, which in turn, may lower the pace of economic activity. For this reason, it may be important to monitor GDP data for the month of August to see the impact on consumption.

Here are the prints that have been impacting the Canadian Dollar this morning:

- CAD Labor Productivity (QoQ) (2Q): 85.0%as expected, from 83.3% (revised lower from 83.3%).

- CAD Net Change in Employment (AUG): 22.2k versus 15.0k expected, from 10.9k previously.

- CAD Unemployment Rate (AUG): 6.2% versus 6.3% expected, from 6.3% previously.

- CAD Full Time Employment Change (AUG): -88.1k, from 35.1k previously.

- CAD Part Time Employment Change (AUG): 110.4k, from -24.3k previously.

- CAD Participation Rate (AUG): 65.7k, from 65.7k previously.

See the DailyFX economic calendar for Friday, September 8, 2017

Chart 1: USDCAD 15-minute Chart (September 8, 2017 Intraday)

The reaction we’re seeing today in the Canadian Dollar is nothing like the +1% increase that we saw after the BoC rate hike. We saw that there was chop USDCAD immediately following the print. At the time that this report was written the US Dollar advanced slightly +.02% at This is one of the most intense, intraday moves USD/CAD has experienced this year. On a higher time frame (Daily chart), we find that this pair is now trading at lows last seen in June 2015.

--- Written by Dylan Jusino, DailyFX Research

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