Canadian Dollar Tumbles on Jobs Shock and Strong US Payrolls
The Canadian dollar suffered a sharp decline on Friday after a surprise drop in domestic employment, contrasting with a stronger-than-expected U.S. jobs report.
The loonie had been gaining strength recently due to a weakening U.S. dollar and rising oil prices, but the latest labour market data reversed this trend. According to Statistics Canada, the country's economy lost 41,700 jobs in August, far exceeding expectations of an increase of about 15,000.
The unemployment rate remained steady at 6.4%, while the employment rate slipped 0.1 percentage point to 60.8%. The sharp decline in labor market puts pressure on the Canadian dollar, and this pressure could continue over the next few weeks, simply because the latest labor data now makes it harder for the Bank of Canada to justify a more hawkish stance.
Alex Tsepaev, Chief Strategy Officer of B2PRIME Group, noted that 'the fact that the US jobs report came in strong will increase the chances for the Fed to keep rates higher for a longer period.'