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10/06/24
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CAD Falls After Strong Jobs Data From US
The week has been rough for the Canadian dollar, and it dropped 1% versus the US dollar. A combination of a hot US nonfarm payrolls report and lukewarm job data out of Canada on Friday pushed USD/CAD up by 0.70%. On Monday, the Canadian dollar was unchanged and traded at about 1.3769.
Canadian employment in May rose by 26.7K thousand, after a huge 90.4 thousand gain in April. This was higher than the 22.5K market estimate although full-time employment dropped by 35.6K, versus April’s gain of 40.1K.
Most of the job growth was in part-time employment, which indicates weakness in the labor market as Canadians find it problematic to obtain full-time work. The unemployment rate ticked up from 6.1% in April to 6.2%.
Wage growth was higher than expected and rose to 5.2% in May from 4.8% y/y in April. Wages rose from 0.2% in April to 0.4% m/m. The increase will likely make it more difficult for the BoC to cut interest rates again, as policymakers have been reluctant to cut rates due to strong wage growth.
The Bank of Canada decreased rates last week, the first cut since it began its rate-tightening cycle in March 2022. The BoC’s next meeting will be on July 24.
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