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Canadian Dollar Dips After Job Reports

By Kenny FisherForexOct 07, 2022 11:02AM ET
Canadian Dollar Dips After Job Reports
By Kenny Fisher   |  Oct 07, 2022 11:02AM ET
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USD/CAD has edged higher today. In the North American session, the Canadian dollar is trading at 1.3712, down 0.25%.

Canada’s Ivey PMI, a key barometer of the strength of the economy, underperformed in September. The PMI dipped to 59.5, down from 60.9 in August, which was also the consensus. Still, the PMI remained deep in expansion territory, where it has been for most of 2022.

Canada, U.S. Post Solid Employment Reports

The U.S. nonfarm payroll report was a bit stronger than expected, at 263,000. This was down from 300,000 but beat the consensus of 250,000. Wage growth remained strong at 5.0%, edging down from 5.2% prior and just below the consensus of 5.1%. The U.S. dollar has responded with broad gains, as the strong data bolsters the case for additional outsized rate hikes from the Federal Reserve in order to curb inflation.

Canada posted a solid employment report, although the Canadian dollar couldn’t make any inroads against a broadly-higher US dollar. The economy created 21,100 new jobs, edging above the consensus of 20,000 and a welcome turnaround after the August reading of -39,700. The unemployment rate dropped to 5.2%, down from 5.4% prior, which was also the consensus.

For the Bank of Canada, these strong job numbers mean that the labour market remains robust even as the BoC continues to raise rates in order to defeat inflation. Although inflation has slowed in the past two months (as is the case in the US), Governor Macklem said on Thursday that the economy is still too hot and more rate hikes are needed. The BoC’s core inflation indicators remain high, so the recent drop in CPI is not all that important, certainly not enough to cause a rethink at the BoC about its aggressive rate policy. Macklem’s hawkish speech was a strong signal that the BoC isn’t pivoting any time soon, and the markets have priced in a 0.50% hike at the Oct. 27 meeting.

USD/CAD Technical

  • 1.3927 and 1.4024 are the next resistance lines
  • There is support at 1.3744 and 1.3647

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Canadian Dollar Dips After Job Reports

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Canadian Dollar Dips After Job Reports

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