Forex traders received the Canadian Employment Report for September roughly 30 minutes ago. The data was much stronger than expected, but the Canadian Dollar did not rally as strong as one would have imagined despite a rock solid employment report. The Canadian Dollar has experienced a long period of selling pressure and positive economic data as released today did little to change the overall negative sentiment towards the Canadian currency.
Economists expected the addition of 20,000 jobs in September which would have been a solid recovery after the Canadian economy unexpectedly lost 11,000 jobs in August. The August employment report send shockwaves through the forex market and forex traders sold the Canadian Dollar heavily which reached multi-month lows against other major currency pairs. The Canadian Dollar has not yet recovered from the sentiment shift.
Today’s report showed that the Canadian economy added 74,100 jobs in September. The unemployment rate decrease by 0.2% from 7.0% to 6.8%. Forex traders initially bough the Canadian Dollar, but the move was short lived and the rally stalled before being partially reversed. This is a rather worrisome sign for the Canadian currency as a report like today should have send the Canadian Dollar rallying by over 100 pips potentially much closer to 200 pips over the next three to five trading days.
Today’s report did not only surprise on the headline, but showed underlying strength in the Canadian labor market which until August’s surprise employment contraction was considered as a role model for a healthy economy. Full-time employment rose by 69,300 while part-time positions increased by 4,800. This is a remarkable reading especially on the full-time employment front. The Canadian Dollar all, but reversed early gains made.
The sharp increase in employment compares to August’s job losses of 2,300 in full-time employment and 8,700 in part time employment. The labor force participation rate remained unchanged at 66.0%. Overall the Canadian Dollar is poised for a reversal of losses, but the failure to do so after today’s employment report is a disappointing development and points towards more widespread and deeper economic issues which hang over Canada like a thundercloud.