Canada’s labor market delivered a surprise in April, adding 90,400 jobs and far surpassing the forecasted 18,000. This surge, following a month of contraction in employment, illustrates a positive trend for the Canadian economy which has been greatly overshadowed by the neighboring US in 2024. Now with its highest growth since January of 2023, Canadian officials hope for some consistency that has been missing in the employment sector so far this year.
Despite forecasts predicting a rise to 6.2%, Canada’s unemployment rate held steady at 6.1% last month. This steadiness offers a slight reprieve after March’s jump to 6.1% marked the highest level since 2022. While still far from the Bank of Canada’s goal, officials are hopeful this reading is a sign that unemployment will soon return to the 5% range or lower. For forex traders, a stable unemployment rate can signal economic stability which, in turn, may influence the Canadian dollar’s stature in currency pairs.
The Canadian dollar strengthened across all major currencies following the data release, including a 40 pip down move in USD/CAD to below 1.3650. This movement showcases the direct impact that labor market data can have on currency prices as trader’s speculate on the perceived growth of the Canadian economy and anticipation of future monetary policy actions.
