The Canadian labour market showed unexpected strength in June, with total employment rising by 83.1K, surpassing an anticipated 0.0K and the previous month’s 8.8K increase. Part-time employment contributed significantly, soaring by 69.5K, while full-time jobs saw a smaller increase of 13.5K. The unemployment rate dropped to 6.9% from 7.0%, below the expected 7.1%. The participation rate slightly increased to 65.4% from 65.3%. However, average hourly wages for permanent workers decreased slightly from 3.5% to 3.2% year-on-year.
Following the employment data, the USDCAD dipped from 1.3686 to a session low of 1.3651, breaching the Asian session’s low of 1.3652. Buyers intervened near this support level, pushing the pair to a high of 1.3673, near the 100-hour moving average at 1.3675. A climb above this moving average could challenge the sellers’ momentum. However, if USDCAD remains below this level, sellers may aim for the session’s low and the rising 200-hour moving average of 1.36424.
Impact On Currency Markets
The earlier portion of this report highlighted an unanticipated pickup in Canadian employment during June, which had a noticeable impact on currency markets. With 83,100 jobs added — most of them part-time — and a dip in the unemployment rate to 6.9%, there’s been a short-term boost in sentiment surrounding the Canadian dollar. The wage slowdown, however, offered a contrasting signal, suggesting less pressure on the Bank of Canada to take immediate action on rates. Still, the market placed more weight on job creation, at least for now.
We observed a reaction in the USDCAD exchange rate following the data release. A modest drop in the pair showed that the Canadian dollar strengthened temporarily, moving below the 1.3652 level marked earlier in the Asian trading session. The response was prompt, buyers re-entered around this familiar floor and nudged the price back up. That bounce stalled close to the 100-hour moving average, a level just above at 1.3675. These averages serve as convenient and often respected thresholds in short-term trading, and this one seems to have offered a stumbling block for bulls today.
If we’re holding positions that depend on directional conviction, this is one of those times where hesitation in price near a defined metric — such as a moving average — could trigger swift reversals or suggest that traders are unconvinced. In this instance, we see failure to stay above the 100-hour indicator, which could keep downside targets active — beginning with the day’s low and potentially moving towards 1.3642, where the longer-term 200-hour average is steadily ascending.
Looking Ahead
As we step into coming sessions, it’s worth noting that the labour data doesn’t align fully with the slower wage growth. That’s not a mismatch to ignore. Typically, strong job numbers push central banks towards tightening, but tepid wage pressure might delay any such decisions. As Canada gets closer to its next decision point, options pricing should start to reflect higher realised volatility particularly in shorter tenors.
For the time being, we are staying alert to moves below 1.3650 and to any consolidation beneath the 100-hour average. This sort of technical hesitation could imply renewed testing of support. Importantly, headline reactions like the one seen after these numbers can be retraced swiftly if they run counter to the broader rate narrative. Any large intraday move should be treated with scrutiny until follow-through volume confirms a shift.
We’re staying attentive to messaging from policymakers in the days ahead and will measure follow-through in both spot and options. The interplay between softer inflationary signals and a recovering workforce might create surprise skew in forward implieds. Carefully tracking those changes can give early clues before spot catches up.
