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Canadian Dollar: Loonie Sinks on Weak Jobs Report, Housing

Canadian Dollar: Loonie Sinks on Weak Jobs Report, Housing

2019-11-08 13:44:00
Rich Dvorak, Analyst
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CANADIAN DOLLAR, CANADA JOBS REPORT, BOC – TALKING POINTS:

  • The Canadian Dollar swooned after the latest Canada jobs report disappointed loonie forex traders likely owing to a jump in the probability of a BOC rate cut
  • USD/CAD skyrocketed to an intraday high while CAD/JPY took a nosedive subsequent to the Canadian employment and housing figures released
  • Enhance your market knowledge with our free Forecasts & Trading Guides available for download

The Canadian Dollar (CAD) is coming under heightened selling pressure following the latest data on Canada’s economy – specifically its labor and housing markets. Canadian net change in employment for October came in at a disappointing -1.8K print for the headline figure which was a big miss compared to the median economist estimate of +10.0K. Looking ‘under the hood’ of the Canada jobs report revealed even bleaker details with a decrease in full-time employment to the tune of -16.1K jobs.

CANADIAN JOBS REPORT: CANADA FULL-TIME EMPLOYMENT CHANGE DROPS -16.1K

Canadian Employment Change Chart of Historical Data

Although, the Canadian unemployment rate held steady at 5.5% as expected and the year-over-year hourly wage rate for permanent employees ticked higher to 4.4% which topped the 4.2% estimate.

Prior to the release of the latest Canadian employment figures, data on housing starts crossed the wires at a worse-than-expected 202.0K compared to the market consensus of 222.5K.

Moreover, the month-over-month change in Canada building permits cratered a whopping -6.5% and compares to an estimate of -1.8%. Check out the DailyFX Economic Calendar for a detailed list of economic data releases and scheduled event risk.

CANADIAN DOLLAR CURRENCY INDEX PRICE CHART: 2-HOUR TIME FRAME (SEPTEMBER 30, 2019 TO NOVEMBER 08, 2019)

Canadian Dollar Index Price Chart

Chart created by @RichDvorakFX with TradingView

The Canadian Dollar Currency Index is currently trading -0.41% lower on the day subsequent to the data release. Spot USD/CAD prices extended higher and on pace for a 0.41% gain while CAD/JPY has plunged 35 pips from intraday highs so far to trade -0.37% lower. AUD/CAD reversed earlier losses and is now roughly flat while EUR/CAD is climbing.

BANK OF CANADA RATE CUT PROBABILITY (DECEMBER 2019)

BOC Bank of Canada Interest Rate Cut Probability Chart

Following the lackluster Canadian jobs report and housing data the probability that a Bank of Canada interest rate cut will be delivered at the central bank’s next meeting jumped to 21.7%, which is noticeably from a 14.8% reading the day prior, according to overnight swaps pricing.

Check out this Canadian Dollar Forecast for comprehensive fundamental and technical outlook on the Loonie with additional insight on how CAD price action stands to be impacted by the Canadian jobs report and changes in BOC rate cut expectations.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

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