• Canadian employment change rises strongly 
  • GDP also beats forecasts
  • CAD rising across the board

A bunch of data from Canada has painted a much stronger than expected picture of the economy with both labour market figures and economic growth numbers rising and beating forecasts. First off, let’s look at the labour market data.

The monthly employment change came in at 79.5k against a consensus forecast of 10.2k and a prior reading of 35.3k. The composition of the jobs weren’t as strong as previously with 29.6k being full time and 49.9k being part time against prior readings of 88.7k and -53.4 respectively. However, this is still a clear positive datapoint for the labour market. 

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 The latest data on the Canadian Labour market has come in better than expected and suggests it is in good health. Source: XTB Macrobond

The unemployment rate also impressed, falling to 5.9% the lowest level since the March 2008 release. This was also better than the expected (6.2%) and the prior reading (6.3%) and support the employment change beat in painting a rosy picture of the labour market. 

Turning our attention to the GDP data, there was more good news here with a M/M rise of 0.2% vs +0.1% expected and a drop of 0.1% previously.  The Y/Y reading was a little worse in coming in as expected at 3.3% after a prior reading of 3.5%, but the levels of growth remain strong. There was a notable drop in next exports which was the largest contributing factor to the decrease, with household spending remaining one of the key drivers of growth.  

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 Canadian GDP beat forecasts and rose in M/M terms compared to Y/Y terms. Source: xStation

 The market reaction to this data has been quite clear with the Canadian dollar surging higher and it is currently the best performing currency in the G10. USDCAD has dropped almost 150 pips since the release and has fallen below the 1.2750 level.  

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 USDCAD dropped sharply following the release and is lower by around 150 pips in the last hour. Source: xStation

Looking at a daily chart today’s trade could be significant with the D1 candle currently engulfing the last 3 days of trade. A possible double top has now formed at 1.2905 and should the pair drop below the 1.2665 level then there could be further declines ahead. 

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 Longer term a double top could be forming around the 1.29 handle. Source: xStation