With the Bank of Canada gearing up for an interest rate decision this week, let’s take a look at what the country’s latest jobs release could mean for the central bank’s policy bias and the Loonie’s forex price action.
1. Employment change and jobless rate beat forecasts
First, the good news. Both the employment change and jobless rate readings for March came in stronger than expected, with the former showing a 28,700 increase in hiring and the latter holding steady at 6.8%. Forex market participants actually set the bar pretty low for this particular release, as most analysts expected to see a decline of 1,000 in employment and an increase to 6.9% for the unemployment rate.
Scrolling further back reveals that Canada has chalked up its third consecutive month of better than expected employment change readings. Components of the latest report shows that the natural resources sector managed to hire an additional 6,300 workers for March, even as oil prices have been falling.
2. Majority of hiring gains in part-time positions
Now for the not-so-good news. Canada’s March jobs report also showed that the positive employment change figure was simply spurred by a 56,800 increase in part-time hiring. This was more than enough to offset the 28,200 decline in full-time employment, which paints a more grim picture for the Canadian labor market.
This explains why several Canadians are feeling less optimistic about their job prospects. A weekly survey conducted by Nanos Research Group showed that the percentage of Canadians who don’t feel secure about employment conditions rose to 15% earlier this month while the share of those who feel somewhat secure fell to 69% – its lowest reading since January.
3. BOC likely to keep policy unchanged?
Despite these weak spots, forex analysts believe that BOC Governor Poloz and his men are likely to sit on their hands for their upcoming monetary policy decision. After all, the central bank has already implemented a surprise interest rate cut back in January in order to cushion the Canadian economy from the negative impact of the oil industry slump.
While the components of the March report have been far from impressive, the figures still showed a pretty decent rebound from the previous downbeat releases. These might be enough to keep the Canadian dollar afloat in the coming days unless the BOC shocks the market with another interest rate cut. Do you think that’s bound to happen?