The Canadian job market showed surprising strength in June. Total employment jumped by 83.1K, well above the expected 0.0K and the previous month’s increase of 8.8K. Part-time jobs played a major role in this growth, rising by 69.5K, while full-time positions increased by 13.5K. The unemployment rate fell to 6.9% from 7.0%, which is lower than the expected 7.1%. The participation rate ticked up slightly to 65.4% from 65.3%. However, average hourly wages for permanent workers dropped from 3.5% to 3.2% year-on-year. After the employment report, the USDCAD exchange rate dipped from 1.3686 to a low of 1.3651, breaking the earlier low of 1.3652 during the Asian session. Buyers stepped in near this support level, pushing the pair back to a high of 1.3673, close to the 100-hour moving average at 1.3675. If the pair climbs above this moving average, it could challenge sellers. However, if USDCAD stays below this level, sellers may target the session’s low and the rising 200-hour moving average at 1.36424.

Impact On Currency Markets

The earlier part of this report noted an unexpected rise in Canadian employment in June, impacting currency markets significantly. With 83,100 jobs added — mainly part-time — and the unemployment rate dropping to 6.9%, the Canadian dollar gained temporary support. However, the slowdown in wages raised a different concern, suggesting that the Bank of Canada might not feel pressured to change interest rates right away. For now, the market is focusing more on job creation. We saw a reaction in the USDCAD exchange rate following this data release. The slight drop in the pair showed that the Canadian dollar gained strength temporarily, moving below the previously marked level of 1.3652 during Asian trading. Buyers quickly returned around this support, pushing the price back up. The upward movement stalled near the 100-hour moving average, which sits just above at 1.3675. These averages are often respected in short-term trading, and today, they appear to be a barrier for bulls. If we have positions that rely on market direction, this is a critical moment. The uncertainty near a key level, like a moving average, might lead to quick reversals or suggest a lack of confidence among traders. In this case, failing to stay above the 100-hour indicator could keep downside targets active, starting with the day’s low and potentially heading toward 1.3642, where the longer-term 200-hour average is steadily rising.

Looking Ahead

As we move into the next sessions, it’s important to note that the labor data doesn’t completely match the slower wage growth. This gap shouldn’t be overlooked. Typically, strong job numbers encourage central banks to tighten rates, but weak wage growth may delay those decisions. As Canada approaches its next rate decision, we should see options pricing reflect higher volatility, especially in shorter time frames. For now, we are monitoring moves below 1.3650 and any consolidation under the 100-hour average. Such technical hesitation could indicate renewed testing of support. Additionally, initial reactions to these numbers can quickly reverse if they contradict the broader rate expectations. We should scrutinize any significant intraday moves until volume confirms a change in trend. We will stay vigilant for messages from policymakers in the coming days and will track their follow-through in both spot and options markets. The interplay between softer inflation signals and a recovering workforce might lead to unexpected shifts in forward implieds. Keeping an eye on these changes can provide early insights before spot prices adjust. Create your live VT Markets account and start trading now.

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