• Canadian employment change for August rises to 22.2k vs 17.8k exp
  • However, increase down to huge rise in part-time jobs. Full time roles fell
  • USDCAD remains near weekly lows

The strong recent streak of Canadian data has seemingly continued this afternoon with the employment change figure coming in at +22.2k vs +17.8k exp – the 11th occasion out of the last 13 when this labour market indicator has beat forecasts.

However, upon closer inspection the release isn’t as positive for CAD as it initially appears. The increase is solely down to a huge jump in part time jobs, with full time roles falling sharply in what could be seen as an early warning sign. The number of full time jobs filled fell precipitously from +35.1k previously to -88.1k. The overall figure was only positive because of a huge jump in part time jobs which rose to +110.4k from -24.3k prior.  

link do file download linkThe rise in employment change was solely down to a big increase in part time work. Full time jobs actually fell by 88.1k. Source: Bloomberg

 Another important part of the report to note is the continued decline seen in the unemployment rate which fell once more and declined to 6.2%. The last two years have seen a marked decline in this indicator which was at 7.2% at the star of 2016. Average earning has also risen during this time, further supporting the perception of a strengthening in the labour market. 

link do file download linkThe unemployment rate continued to decline and fell to 6.2%. Average earnings ticked higher and is close to its 3-year high. 

In terms of market reaction the Canadian dollar has come under a little bit of pressure since the release. USDCAD has moved off its lows, with the market seemingly focusing on the drop in full time jobs ahead of the better than expected headline number. 

link do file download linkUSDCAD has moved off the lows after the data, but remains firmly below pre-BOC levels. Source: xStation

The recent rise should be put in the correct perspective however and CAD remains one of the top performers this week. The drop seen in the USDCAD after the Bank of Canada unexpectedly raised rates saw some long term technical damage inflicted on the chart and whilst price remains below 1.24 then there remains the possibility for further declines. 

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 The pair has broken below a key support level this week however and remains in a longer-term downtrend. Source: xStation