USD/CAD: Loonie Finds Buyers on Healthy Labour Market Numbers

Canada reported an employment change of 54.1K and an unemployment rate of 5.8% for July, beating expectations on both fronts. Market forecasts were a 17K gain in jobs along with a 5.9% unemployment rate.

In June, the change in the number of employed people reached 31.8K after contracting for 7.5K and 1.1K in May and April, respectively. The unemployment rate experienced a fall from 5.8% in April to 6.0% in June.

Following the report, the Canadian dollar found immediate buying pressure and rose to 1.3026 against the US dollar after reaching the pair’s August 8 high of 1.3119 in intraday trading. To the downside, the pair could find short-term support at the August 7 low of 1.2961, while Wednesday’s high remains an important resistance of USD/CAD to the upside. As of 13:48 London time, the pair traded at 1.3080.

Markets now don’t expect that Saudi Arabia-Canada relations will have a noticeable impact on the Canadian economy given the rather humble $4 billion trade value between the two countries.

The Bank of Canada is also one of the few central banks in the world that is on a hiking cycle comparable to the Federal Reserve. Today’s healthy print in labour market numbers increases the chance of an October rate hike by the central bank, and expectations of a further rise of oil prices could well support the Canadian dollar by year-end.

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