• Canadian employment change: 78.6k vs 1.8k exp and 79.5k prior
  • Unemployment rate falls to 5.7% from 5.9% previously
  • Canadian dollar surges higher

Whilst the US NFP report was a little inconclusive as to whether it was good or bad, there is little question regarding its Canadian equivalent which smashed forecasts. The headline employment change rose by 78.6k against forecasts for a 1.8k rise and coming on the back of last month’s 79.5K it appears that the Canadian jobs market is going from strength to strength.

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 Canadian employment change rose strongly for the 2nd month in a row. Source: Bloomberg

One important this to look out for in the Canadian report is the nature of the jobs created. Sometimes a large rise in the overall employment figure can hide the fact that a lot of these are part-time and therefore not as positive for the labour market as full-time roles. The number of full-time jobs was 23.7k (29.6k prior) and the number of part-time 54.9k (49.9k prior) so on this front the report looks pretty solid. 

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 The composition of the jobs was also fairly pleasing with a fair proportion coming as full-time roles. Source: XTB Macrobond

Unsurprisingly the Canadian dollar has risen strongly across the board since the release. USDCAD has dropped below the 1.24 handle on the surge in the Loonie and you have to go all the way back to late September to find a lower price for this pair. The pair had been consolidating in a range from 1.2660-1.2920 for a couple of months but after breaking below 1.2660 near the end of December the sell-off has accelerated. A breakout from a period of consolidation like this can use the range projected below (or above) as a possible target for the breakout. Along these lines 1.2400 could be seen as a possible target and this has been subsequently hit in the last hour since the data was released.

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 The USDCAD has met a possible target of the recent breakout following this afternoon’s data. However, in the absence of a reversal signal there could be further downside ahead. Source: xStation