Canadian Unemployment Rate higher than expected at 6.1%
Canada’s recent unemployment rate of 6.1% exceeded forecasts, which had anticipated a slightly lower figure of 5.9%. This weaker-than-expected employment data could give reason for the Bank of Canada to begin lowering interest rates sooner than previously thought, as they attempt to steer unemployment closer to 4%. The anticipation of lowering rates and weakening economic performance often weakens future demand for a currency – and their valuation against other currencies as a result.
US Unemployment Rate lower than expected at 3.8%
In contrast to Canada, the US unemployment rate came in lower than expected at 3.8%, against forecasts of 3.9%. This stronger-than-anticipated labor market performance in the US could bolster investor confidence in the US dollar, affecting currency pairs like USD/CAD by widening the economic performance gap between the two countries.
Nonfarm Payrolls hit 303k in March
The low unemployment rate is closely tied to the substantial job additions reported in Nonfarm Payrolls report. The report revealed 303k added jobs in March, substantially exceeding the expected 200k, and signifying the most robust employment growth seen in the last 10 months. While 2024 has consistently witnessed Nonfarm Payroll figures exceeding expectations, revisions of the previous month’s numbers downwards introduce a layer of unpredictability to these otherwise encouraging statistics. This report was no different, with February’s 275k number revised down to 270k.
USD/CAD hits new high above 1.3600
The surge in USD/CAD above 1.3600 places the pair approximately 300 pips away from its highest levels since 2020 of around 1.3900. Like its resistance to 1.3600 in 2024, USD/CAD has hit 1.3900 multiple times in recent years but has not traded through it since 2020, when the pair reached prices around 1.4500.
