Strong Canada Employment Report To Curb USD/CAD Rebound

Updates to Canada’s Employment report may curb the recent rebound in USD/CAD as the economy is expected to add another 19.0K jobs in July.

After delivering a 25bp rate-hike in June, data prints pointing to a strengthening labor market may encourage the Bank of Canada (BoC) to further normalize monetary policy over the coming months as the ‘Governing Council expects that higher interest rates will be warranted to keep inflation near target.’ In turn, Governor Stephen Poloz & Co. may continue to prepare Canadian households and businesses for higher borrowing-costs at the next meeting on September 5, and a positive development may ultimately spark a bullish reaction in the Canadian dollar as it boosts bets for an imminent BoC rate-hike.

However, a below-forecast employment print may fuel the recent advance in USD/CAD as it dampens the outlook for growth and inflation, with the Canadian dollar at risk of facing headwinds over the near-term as market participants push out bets for the next BoC rate-hike. 

IMPACT THAT CANADA EMPLOYMENT REPORT HAS HAD ON USD/CAD DURING THE LAST PRINT

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JUN

2018

07/06/2018 12:30:00 GMT

20.0K

31.8K

+22

-11

June 2018 Canada Net Change in Employment

USD/CAD5-Minute Chart

Canada employment bounced back 31.8K in June after contraction 7.5K the month prior, while the jobless rate unexpectedly climbed to 6.0% from 5.8% during the same period as the labor force participation rate climbed to 65.5% from 65.3% in May. A deeper look at the report showed full-time employment increasing 9.1K during the month, with part-time jobs rising 22.7K, while hourly earnings narrowed to 3.5% per annum from 3.9% in May.