USDCAD swoons as NFP misses and Canadian jobs beat

Summary:

• US NFP: 155k vs 198k exp; Earnings M/M: +0.2% vs +0.3% exp

• Canadian employment change: 94.1k vs 10.5k exp

• US yields and USD little changed; CAD moving firmly higher

The latest jobs data from the US has served to reaffirm the notion that while the labour market in the world’s largest economy remains robust, jos growth may have peaked. The non farm employment change for November showed 155k jobs were added, lower than the 198k expected and the third time in the past 5 releases that this metric has come in below the 200k mark. The decline marked a pretty sharp drop on the previous reading of 237k which itself was revised down from 250k beforehand.

Thursday’s miss in the ADP release served as a warning for today’s number, with these two jobs figures exhibiting a fairly strong positive correlation of late. Source: XTB Macrobond

While the headline reading always draw a lot of attention, wages have been just as important in recent years and there was also a little softness here. Average wages rose by 0.2% in month-on-month terms, the same as the prior month and below the 0.3% increase that was forecasted. In year-on-year terms they were unchanged at +3.1% as was predicted by the consensus forecast.  

Higher wages in the US often translate to higher inflation as measured by core CPI. The recent dip may be seen to exert a little less upwards pressure on prices. Source: XTB Macrobond

If the US data was a little disappointing and on the soft side, the Canadian figures released at the same time were very strong, and in fact the highest since 1976. Employment change for November came in at 94.1k vs 10k expected, a big increase on the 11.2k seen last time out. Even more pleasing for Canadians was the composition of the jobs as nearly all of them were full time. Part time roles increased by just 4.1k, meaning that 89.9k jobs were added on a permanent basis.

Not only was the latest employment figures better than expected in Canada, the bulk of the roles were full-time meaning they are seen as more likely to prove persistent. Source; XTB Macrobond

Perhaps a little surprisingly there’s not really been too much downside seen in the buck since the release although the EURUSD did rally to its highest level of the day above the 1.14 handle not long afterwards. The biggest move in forex can be seen in USDCAD, with the market receiving a dual push lower from a combination of weakness in the greenback and strength in the Loonie. The pair has fallen around 100 pips since the data came out and has now erased the entire gains seen from the dovish BOC shift on Wednesday.

USDCAD has erased the entire gains seen since the dovish BOC on Wednesday with the latest North American jobs figures providing a dual push lower in this pair. Source: xStation

USDCAD has reversed from prior resistance around 1.3445 with today’s jobs figures from both the US and Canada contributing to the recent selling. Source: xStation