- Prior month employment change: 75.1K
Details for the month of August:
- Employment change:-41.7K vs +15.0K expected; prior +75.1K
- Unemployment rate:6.4% vs 6.4% expected; prior 6.4%
- Full-time employment change:-35.9K vs prior +38.6K
- Part-time employment change:-5.8K vs prior +36.6K
- Participation rate:65.0% vs prior 65.1%
- Average hourly wages for permanent employees:+2.0% YoY vs +3.0% expected; prior +3.0%
The Canada employment report for August was weaker than expected. Employment fell by 41.7K, well below the expected gain of 15.0K, with losses in both full-time and part-time positions. Full-time employment declined by 35.9K, while part-time employment fell by 5.8K.
Despite the decline in employment, the unemployment rate remained unchanged at 6.4%, matching expectations. That was partly explained by the participation rate slipping to 65.0% from 65.1%, meaning fewer people were actively participating in the labor force.
Wage growth also cooled sharply. Average hourly wages for permanent employees increased by just 2.0% from a year earlier, down from 3.0% in the prior month and below the 3.0% estimate. Overall, the report points to a softer Canadian labor market, with falling employment, weaker labor-force participation and easing wage pressures. That combination should reduce pressure on the Bank of Canada to tighten policy further and is a negative input for the Canadian dollar. With the US jobs report showing more strength the USDCAD is moving higher. .
Technically, the combination of a weaker Canadian employment report and a stronger US jobs report has sent the USDCAD sharply higher. The fundamental story is supportive of the move: softer Canadian data weakens the CAD, while stronger US data supports the USD.
The rally has also produced an important technical shift. The price has moved back above its 200-day moving average at 1.3836, followed by breaks above the 100-hour moving average at 1.3850 and the 200-hour moving average at 1.38587. Moving above all three levels increases the bullish bias and gives buyers greater control.
The next key target is the 38.2% retracement of the decline from the late-July high at 1.3882. A sustained break above that level would open the door toward 1.39079, followed by the 100-day moving average at 1.3919.
For traders, identifying risk is just as important as identifying targets. The 200-day moving average at 1.3836 is now the key risk-defining level. Buyers would not want to see the price move back below—and stay below—that moving average. If it does, the breakout would begin to look like a failed move, and some of the post-employment-report buyers could turn back into sellers. As long as the price remains above that level, however, the buyers maintain the stronger technical hand.
This article was written by Greg Michalowski at investinglive.com.