If the Canadian dollar was looking up to the jobs report to recover, it got a bitter disappointment. The only good detail was that the unemployment rate fell to 7%. However, the details are not looking good.
USD/CAD jumped from support around 1.0910 to 1.0975 and it basically refuses to fall.
Like its southern neighbor, Canada is seeing a drop in the unemployment rate only thanks to a drop in the participation rate. The latter fell below 66% to 65.9%, and is the sole reason behind the fall.
Why? Because Canada gained only 200 jobs in the month of July,1% of the 20K expected. Looking at the details, there was a significant change in the type of jobs: 60K part time jobs were gained and nearly the same number of jobs was lost. This is totally different from June’s silver lining.
USD/CAD already reached a higher level earlier in the week: 1.0985. So, loonie bulls could be encouraged by the current failure to conquer 1.10 or even climb above the previous high.
However, job reports usually echo in markets for a long time, making this a longer term weight on the C$. The Bank of Canada’s neutral bias could turn bearish.
For more, see the Canadian dollar forecast.
This is how the jump of USD/CAD looks on the chart:
