CAD Bears Ignore Strong Jobs Reports

  • Canada jobs appear in all the right places
  • “Big” dollar buyers emerge after stellar NFP, hurts loonie
  • Canada jobs headline eliminates for now a BoC rate cut
  • NFP report makes IMF request outdated

The loonie’s rise after Canadian and American jobs data was released was brief. The weak short USD/CAD positions did see the loonie rally to below the psychological C$1.2500 handle ($1.2480) where a plethora of “big” dollar buyers immediately appeared.

The CAD has since reversed course and is now trading at new USD/CAD highs for the day (C$1.2555) as the market seems to favor buying USD dips after today’s stellar nonfarm payrolls (NFP) report stateside pressures the Federal Reserve’s timing on rate normalization. The Bank of Canada (BoC) is not expected to hike before the Fed.

Details of May’s Canadian Employment Report

Canadian employment surged last month, as the economy added the most jobs in over seven months. Employment came everywhere policymakers would want to see them.

Canada recorded a net gain of +58,900 jobs – analysts had been expecting a net gain of a +10,000 with the full- and part-time almost evenly split (+30,900 and +27,900). The unemployment rate remains unchanged at +6.8%.

Part of May’s gains was driven by self-employment, but paid employment was still up by a robust +37,000. The CAD optimist would suggest that this morning’s jobs figures signal that the Canadian economy is emerging from its first-quarter setback.

Aside from the rate divergence argument, USD bulls will also lean on how volatile and erratic the Statistics Canada jobs report can be. It’s important to remember that ‘one’ headline print is not a trend – do not look at one report in isolation. For fixed-income dealers, today’s report does remove the imminent threat of another rate cut by the BoC.


NFP Makes the IMF’s Fed Rate Hike Delay Request Obsolete

This morning’s +280,000 (+221,000 expected) May NFP print suggests that U.S. employment momentum is back on track after March’s disappointing headline blip.

The details of the report were strong:

  • March and April revised higher by a combined +32,000
  •  Average hourly earnings increased by a robust 0.3%, month-over-month (annual growth to a two-year high of 2.3%)
  • Unemployment ticked higher to +5.5% (more individuals entered the workforce)
  • Participation rate up to 62.9% from 62.8%

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell