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Canadian Dollar Crushed on Weak Employment Data - USD/CAD Soars

Canadian Dollar Crushed on Weak Employment Data - USD/CAD Soars

Justin McQueen, Strategist

CAD Price Analysis & News

  • USD/CAD Spikes Higher on Strong Canadian Jobs Data
  • Employment contracts for second consecutive month

Canadian Jobs Report Recap

The Canadian employment report showed a sizeable drop of 71.2k, significantly worse against an expected 10k increase. The fall in employment had also been distributed evenly between both full-time workers (-38.4k) and part-time workers (-32.8k). Elsewhere, the unemployment rate surprised on the upside, gaining 0.4ppts to 5.9%, despite the fact that the participation rate saw a slight dip. The wage component had also missed expectations rising 4.4%, against an expected 4.5%. Overall, this is a weak data point, which has naturally seen the Canadian Dollar come under notable selling pressure. While BoC’s Lane recently stated that they had not been considering an insurance rate cut, this will likely provide some concerns for the central bank and thus will remain data dependent when considering its next move.

Employment Change -71.2k vs. Exp. 10k (Prev. -1.8k)

Unemployment Rate 5.9% vs. Exp. 5.5% (Prev. 5.5%)

Canadian Labour Market

Market Response

In reaction to the weak labour market report, the Canadian Dollar fell sharply against the US Dollar, resulting in USD/CAD rising to session highs of 1.3250. While money markets are less than 60% priced for a BoC rate cut in 2020, continued signs of weakness in the Canadian economy is likely to force the central bank into an insurance cut.

USDCAD Price Chart: 1-minute time Frame (Intraday)

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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

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