🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

USD/CAD Drops to 6-Week Low After Strong US Jobs Data

Published 06/10/2024, 09:27 AM
USD/CAD
-
DX
-

The Canadian dollar had a rough week and declined 1% against the US dollar. On Friday, a combination of lukewarm job data out of Canada and a hot US nonfarm payrolls report sent USD/CAD up 0.70%. The Canadian dollar is unchanged on Monday, trading at 1.3769.

Employment in Canada rose by 26,700 thousand in May, after a massive gain of 90.4 thousand in April. This beat the market estimate of 22.5 thousand but full-time employment took a hit and declined by 35.6 thousand, compared to a gain of 40.1 thousand in April. The bulk of the job growth was in part-time employment, which points to weakness in the labor market as Canadians are having trouble finding full-time work. As well, the unemployment rate ticked up to 6.2%, up from 6.1% in April.

Wage growth surprised on the upside, rising from 4.8% y/y in April to 5.2% y/y in May. Monthly, wages rose to 0.4%, up from 0.2% in April. This increase could make it more difficult for the Bank of Canada to follow with another interest rate cut, as policymakers have been reluctant in the past to lower rates because of strong wage growth. The BoC lowered rates last week, its first cut since it started its rate-tightening cycle in March 2022. The BoC meets next on July 24th.

US Nonfarm Payrolls Shine

There has been lots of talk of a slowdown in the US labor market but job growth was much stronger than expected in May. Nonfarm payrolls rose 272 thousand, blowing past the market estimate of 185,000 and much stronger than the revised gain of 165 thousand in April.

Wage growth was higher than expected, rising to 4.1% y/y, up from a revised 4.0% in April and above the market estimate of 3.9%. Monthly, wages climbed 0.4%, up from 0.2% and higher than the market estimate of 0.3%. Surprisingly, the unemployment rate crept up to 4%, up from 3.9% in April and above the market estimate of 3.9%.

The strong job numbers have helped cushion the impact of high interest rates which has also kept inflation stubbornly high, and that has lowered rate-cut expectations. According to the CME’s FedWatch, the markets have priced in a 0.25% rate cut in September at 51%, compared to 40% just one week ago, with a 99% probability that the Fed will hold rates at this week’s rate meeting.USD/CAD-Daily Chart

USD/CAD Technical

  • There is resistance at 1.3801 and 1.3837
  • 1.3732 and 1.3696 are the next support levels

Original Post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.