Canadian employment rose by a disappointing 94,000 in July. While one month’s figures do not necessarily indicate a trend, the July numbers just released are sufficiently below the consensus forecast of 178,000 and June’s 231,000 to give policymakers pause about the shape of Canada’s economic recovery. The unemployment remains well above pre-pandemic levels (see picture). The poor jobs performance looked especially stark in light of US July payroll figures released at the same time which came in well above expectations. The relative strength of each country’s recovery is important to exchange rates because it goes to determining which central bank will move quicker to rein in monetary policy. The Canadian dollar reacted immediately (down 0.4%) and gave up all of yesterday’s gains against the US dollar. The decline in the loonie comes despite modestly recovering oil prices this morning which were down materially earlier in the week. At the moment, USD to CAD is at 1.252 (CAD to USD at 0.798).
