Data this morning showed that Canada’s jobless rate edged up and the number of people employed was little changed in June.
According to StatsCanada, the Canadian economy lost a net -2,200 jobs in June on a seasonally adjusted basis – the market was looking for an increase in employment of +9,900 new jobs.
Canada’s jobless rate, meanwhile, was +5.5%, matching market expectations and up slightly from the record low of +5.4% in May.
On the plus side, today’s report showed a sharp advance in wage growth. Average hourly wages advanced +3.8% in June, up from +2.8% in the previous month. The market had anticipated that the average hourly would ease to +2.7% m/m.
Note: Demographics are a compelling component of today’s story as employment deteriorated in the core 25-54 age bracket, while Canadians aged 55+ had much greater success finding work.
Loonie under pressure
With the stronger than expected U.S jobs headline print (Jun Non-farm payrolls +224k, unemployment +3.7%, earnings +0.2%) and a somewhat disappointing ‘no change’ report in Canada is favoring the ‘big’ dollar across the board.
The markets had already priced in a “slam dunk” chance of a Fed rate cut at the end of this month, but that view just got a bit more challenging for the Fed. U.S rates are beginning to back up (10’s at 2.01%), favouring a stronger dollar.
The loonie has come under immediate pressure, just before the report USD/CAD was trading at C$1.3065 and now is some 60 pips weaker trading at C$1.3120. However, with the much stronger average hour wage number, expect some CAD bulls to enter and sell into the U.S gains.
With desks stateside half staffed due to U.S holidays, both liquidity and interest may wane sooner in the day.
More to follow.
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