The Greenback gets hammered following disappointing labor data

Key Movers

The Loonie rallied decisively following robust labor data. According to Statistics Canada, employment increased by 81,000 in August, mainly in part-time work, following three consecutive months of little change. The unemployment rate remained at 5.7 percent as more people participated in the labor market. Compared with August 2018, employment increased by 471,000 (+2.5 percent), which was the result of gains in both full-time and part-time work. Over the same period, hours worked increased by 1.2 percent. The robust labor data released today as well as the speech from Deputy Governor Lawrence Schembri yesterday, who discussed the key points of the BoC decision, support the BoC’s position as the least dovish central bank of the G10 today. Deputy Governor Schembri explained that the Canadian economy continued to show strength while the global backdrop weakened. This is what Schembri hinted at yesterday when he said, “At this point, our labour force would be fully employed, and the economy overall would be using all of its productive capacity.” He also said that the relationship between growth and inflation still exists in Canada, which is different in the rest of developed economies, as inflation rates in the United States and other advanced economies have been lower in recent years than you might have expected given relatively strong growth. The USD/CAD pair falls 0.37 percent (stronger Loonie) at the time of this writing, and it is ignoring the weakness in crude oil today.