Strong Canadian jobs data all part-time roles; CAD pulls back

Summary:

• Canadian employment change: 63.3k vs 25.0k; -51.6k prior

• Full time roles: -16.9k vs +15k exp. Part time: +80.2k vs +20k exp

• CAD pulls back post data- EURCAD looking to close gap

The Canadian employment figures are often overlooked due to their release coinciding with the US equivalent, but perhaps because of this it can provide some good trading opportunities. Here we got almost the opposite release to that seen in the US with the headline reading showing a bumper beat, but when you look more closely the data was not so positive. For the month of September the employment changer rose to 63.3k from -51.6k in August, more than the 25k estimated. However, as is often the case with Canadian jobs figures, the composition of the roles is key and here it doesn’t look so positive. The entire rise in employment can be attributed to part time roles (+80.2K vs +20k exp) with full time positions actually declining (-16.9k vs +15k exp) for the month.

The Canadian dollar has fallen back a little since the data was released with the currency now fairly mixed on the day after earlier moving higher. Source: xStation

Similarly to the US release, wages are also an important consideration and here there was more negative news with a Y/Y increase of 2.2% lower than the 2.6% expected - inline with the last month’s reading. The drop extends the run of lower readings for this metric which has pulled back in recent months after peaking earlier this year. However, a core reading which focuses on just the manufacturing and utilities sectors did bounced back to alleviate some of the disappointment miss from the headline.    

Wages fell back last month in Canada which could also be seen as CAD negative although a better than expected read for earnings in the manufacturing and utilities sectors does offer a bright spot. Source: XTB Macrobond

Due to the fact that a major US release coincides with the Canadian jobs figures it can be a little confusing to look at USDCAD for a fair reflection of the market reaction to the Canadian numbers - especially if the US side has been a bit muddled. Therefore other CAD pairs can provide a better reflection, for instance the EURCAD. Here the market has clearly took a negative view to the data with the cross making a strong push higher in the past couple of hours. Price has rallied more than 60 pips since the data dropped and is now at its highest level since Monday. The gap lower over the weekend from 1.4994 could provide a target for longs if this move gains traction.

EURCAD reveals some weakness in the Loonie since the data and the break above 1.4890 has opened up the possibility of a gap fill to 1.4994 from last week’s close. Source: xStation