USD/CAD Bouncing Off the Bottom of the Range Despite the Decline in Unemployment Rate
USD/CAD was declining during the pandemic, as the USD turned bearish, but the decline ended by the middle of last year, as inflation started surging in the US and the FED started turning hawkish. As a result, the USD turned bullish. Nonetheless, we haven’t seen a bullish trend in USD/CAD, since it has been trading sideways in a range since then, which stretches from 1.2450 to 1.30 roughly speaking, while the USD made some large gains against most major currencies.
This shows that the CAD was quite strong as well during this period. Crude oil has been a factor in keeping the CAD in demand. Last month, we saw a bearish reversal in this pair, as crude oil turned bullish due to the conflict in Ukraine and the sanctions placed on Russia by the US. Although, it has bounced off that support zone this week, so it seems like USD/CAD is heading for the top of the range now. The employment report from Canada was sort of mixed, which didn’t play much of a role regarding the price action here.
Canada March Employment Report
- Canada March employment +72.5K vs +80K expected
- Unemployment rate 5.3% vs 5.3% expected (prior 5.5%)
- Full time +92.7K vs 121.5K prior
- Part time -20.3K vs 215.1K prior
- Participation rate 65.4% vs 65.4 exp (prior 65.4%)
- Avg hourly wages 3.7% y/y vs 3.3% prior
- Total hours worked +1.3% m/m
- Employment among those aged 55 or over rose 39K
- Services +42K
- Goods +31K
- Employment to population 62.4%
The fall to 5.3% unemployment marks the lowest Canadian reading since records began in 1976. The adjusted unemployment rate—which includes people who wanted a job, but did not look for one—was below its pre-pandemic level for the first time at 7.2%.
At some point in the very near future, there won’t be much jobs growth because labour supply will be largely tapped out. We’re seeing the over-55 cohort pulled back into the workforce and Canada has heavy immigration so there will still be growth but +25K will soon be a ‘good’ number.
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