USD/CAD Shrugs Despite Strong Canadian Job Numbers

Republished By Plato

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It could be a busy day for the US dollar, with the release of nonfarm payrolls later today. Canada posted a strong employment report on Thursday, as employment change and unemployment were better than expected.

In the European session, USD/CAD is trading at 1.3501, up 0.07%.

Nonfarm payrolls expected to ease

All eyes are on US nonfarm payrolls, with a consensus estimate of 240,000 for March, following a reading of 311,000 thousand in February. This week’s employment releases have been weaker than expected, raising concerns that the robust US labour market is starting to slip. JOLTS Jobs Openings and ADP Employment Change and unemployment claims all missed expectations, and last week’s unemployment claims reading was revised sharply upwards.

Will nonfarm payrolls follow the pattern and disappoint? If so, we could see a strong reaction from the markets, and the US dollar could lose ground due to speculation that the Fed might have to take a pause. The Fed has been able to relentlessly raise rates in large part due to the tight labour market, and if job creation shows cracks, it will be difficult for Fed policy makers to justify another rate hike at the May meeting.

Canada’s employment numbers outperform

Canada released its March employment report on Thursday, and the numbers were solid. The economy added 34,700 jobs, crushing the consensus estimate of 7,500 and above the February reading of 21,800. Unemployment was unchanged at 5.0%, a drop below the forecast of 5.1%. Wage growth eased, however, slowing from 5.4% to 5.2%. The Ivey PMI also pointed to strong growth, climbing to 58.2 in March, up sharply from 51.6 prior and above the consensus estimate of 56.1 points.

The labour market remains surprisingly resilient, even with the Bank of Canada’s aggressive rate-tightening cycle. The Bank of Canada paused rates in March, for the first time since the current cycle started in March 2022. Governor Macklem has said that future rate decisions will depend on the data. The BoC meets on April 12^thand will have to decide if the economy has cooled enough to warrant another pause.

USD/CAD Technical

USD/CAD faces resistance at 1.3590 and 1.3673
1.3436 and 1.3353 are providing support

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A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.