Canadian Dollar Plunges on a Surprise Dip in Employment

Talking Points:

• Canadian employment falls by 7 thousand in February
• Decline in jobs curbs possibility of tighter monetary policy
• Canadian Dollar plunges 100 pips against the Pound

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The Canadian Dollar fell over 100 pips against the Pound after Statistics Canada reported a surprise dip in employment in February.

There was a net decline of seven thousand jobs in February, disappointing expectations for a gain of 15 thousand employed workers and down from the 29.4 thousand rise in net employment reported in January. The unemployment rate remained at 7.0%, as was expected, and the participation rate fell by .1 percentage point to 66.2%.

The 15 thousand person decline in employment was comprised of a net gain of 18.9 thousand full-time jobs and a net decline of 25.9 thousand part-time jobs. 50.7 thousand government workers lost their jobs in February, while the private sector hired 35.2 thousand people.

The Bank of Canada said earlier this week that the direction of the next target rate change depends on incoming data. But just yesterday we got an improved PMI for February and the Canadian Dollar touched a 2-week high against the US Dollar. Therefore, today’s announcement of a net decline in jobs may hamper the possibility of tighter monetary policy.

That’s why the Pound rose to a new 4-day high against the Loonie following the release, and GB/CAD may next find resistance by the 4-year high at 1.8669 (we are avoiding the more popular USD/CAD pair because of the simultaneous release of US jobs number affecting USD trading).

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GBP/CAD 1-Minute: March 7, 2014

Chart created by Benjamin Spier using Marketscope 2.0. Add DailyFX Support/Resistance to your charts at FXCM Apps.

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to [email protected] .