USD/CAD in tight range as Canadian unemployment rate falls to 10.2%

The USD/CAD pair declined slightly as traders reacted to the employment data from the US and Canada and lower crude oil prices. The pair is trading at 1.3110, which is slightly below yesterday’s high of 1.3167.

Canada job growth slows

Canadian employers created more than 245k jobs in August as the country continued to reopen its economy. That number was lower than the 418k jobs that the country created in July. Analysts polled by Reuters were expecting the economy to add more than 275K jobs.

These numbers mean that the country has created more than 1.9 million jobs in the past four months. Still, the country has lost more than 2.9 million jobs during the coronavirus pandemic. This means that more than 1 million Canadians are out of the labour market.

According to Statistics Canada, most of the jobs that were added in August were full-time jobs. The number of part-time workers remained unchanged. Also, the unemployment rate fell to 10.2% in August, which was lower than the previous week’s 10.9%. Analysts were expecting the data to show that the rate fell to 10.1%. The report said:

“As a result of the COVID-19 economic shutdown, the unemployment rate had more than doubled from 5.6% in February to a record high of 13.7% in May.” It added, “during the 2008/2009 recession, the unemployment rate rose from 6.2% in October 2008 and reached a peak of 8.7% in June 2009.”

Participation rate, which measures the percentage of people of working age who are working, increased to 64.6% from the previous 64.3%. This happened even as the number of Canadians who are actively looking for work increased to 1.8 million. At the same time, the number of unemployed people who are not looking for work remained unchanged.

The Canadian employment numbers came at the same time as the US nonfarm payroll data. According to the Bureau of Labour Statistics (BLS), the US economy added more than 1.3 million jobs in August as the unemployment rate dropped to 8.4%. Wages also rose by an impressive 4.7%.

Meanwhile, the USD/CAD pair declined even as crude oil prices fell. The price of Brent crude oil fell by 0.95% to $43.45 while that of the West Texas Intermediate (WTI) fell by 1% to $41. Crude oil is an important Canadian export that brings billions of dollars in foreign exchange. Just yesterday, data from the country showed that crude oil exports pushed the country’s total exports to more than $45.3 billion.

USD/CAD technical outlook

The USD/CAD pair dropped to the intraday low of 1.3082. On the daily chart, the price is still above this week’s low of 1.3000. It is also slightly below the upper line of the descending channel. It is also below the 50-day and 100-day moving averages and is between the lower and middle lines of the Bollinger Bands. Therefore, the pair is likely to resume falling as bears attempt to test this week’s low of 1.3000.