- 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.
