Strong Job Numbers in Canada and the US Impact USD/CAD

Strong Job Numbers in Canada and the US Impact USD/CAD

The USD/CAD currency pair is displaying minimal movement as it trades at 1.3705 in the North American session on Friday, nearly unchanged. Despite initial gains following the nonfarm payroll report, USD/CAD has relinquished these advances.

Strong Job Numbers in Canada and the US Impact USD/CAD

Positive Job Growth in Canada

The past week concluded with robust job growth figures in both Canada and the United States. Canada’s economy generated 63,800 jobs in September, a significant improvement from the previous month’s 39,900, surpassing expectations of 20,000. This marked an eight-month high, though it’s worth noting that the majority of these new jobs were part-time positions (47,900). The unemployment rate held steady at 5.5%, just below the projected 5.6%. Wage growth saw a slight uptick, reaching 5.3%, up from 5.2%, albeit falling short of the 5.5% estimate.

Impressive US Nonfarm Payrolls

The US nonfarm payroll report for September was nothing short of remarkable, showcasing an impressive increase of 336,000 jobs. This follows an upward revision for August to 227,000, surpassing the forecast of 170,000. Wage growth, however, remained at 0.2%, slightly below the projected 0.3%. Additionally, the unemployment rate remained unchanged at 3.8%, in line with the forecast of 3.7%.

Impact on Rate Hike Odds

The robust performance of nonfarm payrolls in the US has significantly increased the likelihood of a quarter-point interest rate hike in November. Prior to the release, the odds of such an increase stood at 19%. Post-release, these odds have surged to 29%, according to the CME FedWatch Tool.

Challenges for the Canadian Dollar

The Canadian dollar has been facing downward pressure, declining by nearly 1% in October. The economy experienced negative growth in the second quarter and is at risk of another negative quarter in Q3. Falling oil prices, a major Canadian export, are also weighing on the currency. Crude oil prices plummeted approximately $5 in one day, marking the most substantial daily drop in over a year and contributing to a 10% decline in October. This decline is attributed to concerns over falling demand and expectations of prolonged higher interest rates.

USD/CAD Technical Analysis

For USD/CAD, resistance levels are seen at 1.3806 and 1.3864, while support can be found at 1.3695 and 1.3638. These technical levels are crucial for traders to monitor as they navigate the currency pair in the wake of shifting economic data and market dynamics.

In conclusion, the strong job numbers in both Canada and the US have influenced USD/CAD, with implications for the potential interest rate hike in November. However, the Canadian dollar faces challenges, including negative economic growth and declining oil prices, which continue to shape the currency’s trajectory.