Forex Jobs Matchup: U.S. vs. Canada

Both the U.S. and Canada printed stronger than expected headline jobs figures for December but as good forex traders, we gotta take a look at what’s beneath the surface to see if there are any weak spots. Let’s break it down yo!

U.S. Non-Farm Payrolls Report

  • Economy added 252K jobs vs. expected 203K gain in December
  • Unemployment rate steady at 5.0% as expected
  • Average hourly earnings at 0.0% vs. 0.2% expected

First, the good stuff. The U.S. jobs release beat expectations for the third month in a row, adding 252K jobs in December and keeping the unemployment rate chillin’ at 5.0%. More Americans actually entered the labor force to resume their job hunt, bringing the participation rate up from 62.5% to a four-year high of 62.6%. To sweeten the deal, previous reports enjoyed upward revisions amounting to 50K, bringing the total employment gains for 2015 to 2.65 million. Way to go, Uncle Sam!

forex strong usdLooking at the jobs numbers across various sectors confirms that the gains were broad-based and not just limited to a few industries. The construction sector added 45K positions during the month, healthcare employment rose by 39K, and professional and business services hiring rose by 73K.

But with most forex market watchers already accustomed to seeing one impressive U.S. jobs report after another, expectations were a bit higher this time around. For this particular release, economic analysts were keen to find out whether or not the labor market improvements are translating to stronger wage pressures, which might then feed into upbeat CPI numbers later on. Unfortunately, this wasn’t the case as the average hourly earnings reading fell flat instead of posting the projected 0.2% uptick.

Canadian Employment Report

  • Economy added 22.8K jobs vs. 10.4K forecast in December
  • Unemployment rate unchanged at 7.1% as expected

Canada’s headline jobs numbers for December are looking as good as Leo’s chances for an Oscar win, as the economy added more than twice as much as the projected jobs gains in December. To top it off, the 22.8K increase was enough to erase a huge chunk of the 35.7K employment losses in the previous month.

However, a closer look at the components of the report reveals that part-time hiring and self-employment were once again responsible for the seemingly upbeat figure. In fact, part-time positions increased by 29.2K during the month while full-time hiring actually slipped by 6.4K. Self-employed folks, typically composed of freelancers or independent contractors, surged by 40.3K while those in regular employment fell by 17.5K. Yikes!

Interestingly enough, employment in the natural resources sector picked up by 3.8K despite the sharp tumble in oil prices towards the end of 2015. Even so, hiring in the mining and oil exploration industries fell by 6.8% throughout the year, shedding a total of 25.6K positions.

What’s next for USD and CAD forex action?

As you’ve probably guessed from USD/CAD’s forex movements during the release of these jobs figures, the reports reinforced the current bullish bias for the Greenback and the bearish bias for the Loonie. After all, it’s no secret that the Fed might be gearing up for yet another interest rate hike soon while the BOC might have to consider cutting rates again.

While USD/CAD seems unstoppable in its ascent these days, it might also be worth looking at other USD or CAD pairs to shake things up a bit. Just make sure you practice proper risk management and be mindful of correlated positions when taking multiple setups. Good luck!