USD / CAD lateralized around 1.2450, trading unchanged after US and Canadian economic data

• USD / CAD is lateralized at 1.2450 as the US and Canadian employment report fails to trigger any lasting volatility.
• The pair will remain focused on oil price movements next week with an empty Canadian economic calendar.

The CAD has not generally benefited from the release of a strong Canadian labor market report on Friday, as the USD and USD / CAD are in neutral territory on the day around 1.2450. The pair has been subject to significant cuts in recent days, along with volatile conditions seen in the crude markets. As it is, and although crude prices are far from weekly lows, WTI will end the week with a drop of around $ 2.0 or just over 2.0%.

Bearish profit-taking impulses, technical sales, large American inventory builds, concerns about demand in China (where a new Covid-19 outbreak is starting), and concerns that the United States may release oil from Its strategic reserves have exceeded the (widely expected) OPEC + decision not to increase production in December by more than 400,000 barrels per day / month stipulated in the current cartel agreement. Looking ahead, with the Canadian economic calendar uncovered next week, turmoil in crude markets will continue to be a key driver of the pair.

Strong Canadian labor market

The Canadian job market is ripped apart. The economy added 31.2 billion jobs in October, and while this was slightly below the market consensus forecast for 50,000, it was driven entirely by gains in full-time employment. In addition, the private sector gained 70,000 jobs, taking its five-month count to 618,000. That’s equal to the faster pace that the Canadian economy has added registered private sector jobs if the initial reopening period after the close of 2020 is ruled out. Hours worked were also up 1.0% at the Ministry of Labor, bringing the change Year-on-year in hours worked, 7.3% was produced. The unemployment rate fell more than expected to 6.7% from 6.9% in September.

The strong employment report bodes well for the Canadian economy, suggesting a strong start to the fourth quarter. The National Bank of Canada (a local bank, NOT the central bank) believes that “there is room for further accumulation of the labor market in the coming months” and cites indicators of strong demand for labor, including data from the CFIB showing that Up to 49% of SMEs are reporting a shortage of skilled labor as a limitation to production, while 40% are reporting a shortage of unskilled labor, with both metrics at their highest level since 2009. The report of employment on Friday does not hurt the outlook for rate hikes as early as the second quarter of 2022.