USD/CAD was making lower highs since October last year, although the lows were getting higher as well. But in June we saw a break lower as the USD resumed the decline and this pair fell to 1.31, piercing below the 100 SMA (green) on the weekly chart. Although, there was no break, as all the weekly candlesticks closed above that moving average, which showed that there was strong buying pressure above 1.31.

On Friday last week, we saw another dip to the downside after the soft non-farm payrolls NFP report, which showed that the labour market is not heating up too much, meaning that the FED has not much of a reason to raise rates again in September. So, we decided to open a quick buy USD/CAD signal which closed in profit.

The main reason though was the softer employment numbers from Canada, which showed that the economy is diving fast. Despite the 70 pip dive, this pair made a U-turn that day and closed the day and the week at the highs, suggesting that buyers are in control. So, we will remain bullish on this pair, buying the dips lower. Below is the employment report from Canada:

Canada July 2023 Employment Report

• July employment change -6.4K versus 21.1 K estimate
• June employment change 59.9K
• Employment change for July -6.4K vs 21.1K estimate
• Unemployment rate 5.5% vs 5.5% expected. Last month unemployment rate was at 5.4%. 3rd consecutive monthly increase
• Full time employment 1.7K vs 109.6K last month
• Part-time employment -8.1K vs -49.8 K last month
• Participation rate 65.6% vs 65.7% last month
• Average hourly earnings 5.0% versus 4.2% (revised from 3.9%) last month
• Total hours worked were virtually unchanged in July and were up 2.1% on a year-over-year basis

Sluggish growth in employment after a stronger-than-expected gain last month. Earnings move higher

Some other highlights:

• Employment in construction fell by 45,000, a 2.8% decrease.
• Public administration saw a decrease of 17,000 employees, a 1.4% drop.
• The information, culture, and recreation sectors lost 16,000 workers, a 1.8% reduction.
• There was a 1.3% decrease in transportation and warehousing employment, equating to 14,000 jobs.
• Health care and social assistance saw an increase of 25,000 employees, a 0.9% rise.
• Employment in educational services rose by 19,000, an increase of 1.3%.
• Finance, insurance, real estate, rental, and leasing sectors gained 15,000 jobs, a 1.1% increase.
• Agriculture employment rose by 12,000, a substantial 4.6% increase.

Where are the jobs being created and lost?

Detailed summary of the unemployment rate:

• The unemployment rate increased 0.1 percentage points to 5.5% in July, following increases in May and June. This marks the first three-month consecutive rise since the early months of the COVID-19 pandemic.
• The unemployment rate for female youth (aged 15 to 24) rose 1.5 percentage points from April to July, reaching 10.3%.
• During the same period, the unemployment rate for core-aged women and women aged 55 and older increased by 0.8 percentage points, to 5.0% and 4.3% respectively.
• There was negligible change in the unemployment rate for men across all age groups.
• In July 2023, over half (53.6%) of the unemployed had been outside the labor force prior to becoming unemployed, while 38.7% had lost or left a job.
• The remaining 7.7% of the unemployed were either on temporary layoff or waiting to start a new position, figures that have barely changed from the previous year.

USD/CAD Live Chart