On Friday, we saw the release of the employment numbers out of Ottawa, and they were most certainly a disappointment. The projected employment change for the previous month of July was expected to come at a positive 9,600 jobs, but was reported to be a loss of 30,400. This is a huge miss in anybody’s book, although the markets didn’t punish the Canadian dollar for this huge loss.
In fact, the Loonie gained on the Greenback for the session, but this more than likely had almost nothing to do with Canada, and everything to do with the possibility of the Federal Reserve easing monetary policy in September. This shows just how one-minded the markets are right now, as the possibility of more liquidity injections trumps poor employment.
According to Statistics Canada, the unemployment rate also inched up to print a return of 7.3% for July. This was slightly higher than the expected rate of 7.2%, and will lead many to wonder about how much the economy in the United States is slowing. After all, over 85% of Canadian exports end up in America, and if employment is weakening in the Great White North, there is a strong chance it is because Americans aren’t buying.
One thing that could come into play is if the Federal Reserve either disappoints on the easing side, or simply doesn’t do enough, the Dollar should get a bid. It is against the Canadian dollar that we could see the largest gain as the employment number in Canada looks so weak. So if the Fed doesn’t come through, the Canadian dollar could get punished.