Top Story

US, Canadian Jobs Data and the Week Ahead

While the US jobs report took center stage on Friday, especially since the headline non-farm payrolls data significantly disappointed expectations at 148,000 jobs added in December versus around 190,000 expected, the results of the less conspicuous Canadian employment numbers were no less surprising. Canada’s surprise, however, was in the opposite direction, as the data easily beat expectations for both employment change and the unemployment rate. As a result, the USD/CAD currency pair plunged further below both the 1.2500 and 1.2400 levels.

Aside from the substantial miss in the headline US non-farm payrolls data (148K jobs added in December against prior expectations of around 190K), the unemployment rate came in steady and as low as expected at 4.1%, and wage growth also met expectations at a 0.3% increase in average hourly earnings month-over-month. In the immediate aftermath of the release, the US dollar fell significantly but briefly, before quickly regaining its composure and paring much of its initial losses. However, the greenback generally remained under pressure overall, as it has been since mid-December.

In contrast, the Canadian jobs numbers came out much better than expected, as was also the case in the previous month. Canada’s economy added 78.6K jobs in December, versus a very low prior consensus forecast of only 1.8K. In addition, the unemployment rate fell even lower than the previous month to 5.7% against a prior forecast of 6.0%. As a result, the Canadian dollar surged against its major counterparts, most notably the struggling US dollar, ahead of the Bank of Canada’s rate decision scheduled for mid-January. As noted, the USD/CAD currency pair fell sharply immediately after the simultaneous US/Canada employment releases, dropping to a low of 1.2354 before paring some of its losses.

After Friday’s major data dump, the week ahead – the second trading week of the New Year – will be a very light one in terms of key economic releases. The quiet week begins with UK Manufacturing Production on Wednesday, and then Australian Retail Sales and the US Producer Price Index on Thursday. Friday rounds out the week with the US Consumer Price Index and US Retail Sales. As mentioned previously, the following week starting in mid-January will feature the key Bank of Canada monetary policy decision.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.