Canadian dollar yawns after solid job numbers

There was plenty of activity on Friday, as Canada and the US released key employment data. However, both releases were non-movers, as the Canadian dollar was unchanged on Friday.

US, Canada numbers show job growth

In the US, October nonfarm employment change was stronger than expected, with a gain of 535 thousand. This beat the consensus of 455 thousand. Even more impressive, the September reading was revised upwards from 194 thousand to 312 thousand, pointing to a surge in job growth. The unemployment rate dropped and wage growth rose. This all made for an excellent day at the office, but the fly in the ointment was the Participation Rate, which remained at 61.6%, shy of the forecast of 68.6%. Federal member Esther George said after the FOMC meeting that the Fed would be keeping a close look at whether workers were re-entering the labour market.

The strong job numbers did not translate into gains for the US dollar, but equities continue to rise, as the financial markets have bought into the Fed Chair’s Powell of “taper yes, rate hike no”.

In Canada, the economy created 31,000 jobs in October, shy of the estimate of 41 thousand. The economy continues to recover, and job creation is returning to more normal levels – in the two years prior to Covid, Canada produced about 23 thousand jobs per month. The unemployment rate continues to drop, falling from 6.9% to 6.7%. Back in May, unemployment was at 8.2%, a strong indication that the labor market is healing from the Covid pandemic. Still, unemployment is about 1% higher than prior to Covid, and the Bank of Canada will not be in any hurry to raise interest rates until the economy is on a stronger footing.

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 USD/CAD Technical

• There is support at 1.2379. Below, there is support at 1.2302, protecting the 1.23 level
• There is resistance at 1.2507, followed by 1.2558

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