The Canadian economy can't seem to catch a break. Crashing job numbers and falling retail sales figures paints an ugly picture as of right now.
But what does this mean for us?
Employment Shock: Canada Loses 65.5K Jobs
Canada’s most recent employment change figures came in at -65.5K, wildly missing the forecast of +4.9K. This is not just a weak number, it's a significant shift in labour market conditions.
Alongside this the Unemployment rate rose to its highest level in 4 years at 7.1% with expectations of a further increase.
A shrinking jobs market puts pressure on consumer spending, slows growth, and increases the probability of rate cuts from the Bank of Canada.
Consumers are struggling
Recent figures from September indicate that consumer spending is falling.
Retail Sales: -0.8%
Core Retail Sales: -1.2%
These numbers confirm what the labour market hinted at, that consumers are under pressure, and it's now showing in spending.
Combine weak job data + falling sales = a bearish CAD narrative.
It doesn’t end there, many other data points point to a Canadian economy that is weak.
What can we do about it?
Trade Bias: Bearish CAD
The macro setup and sentiment both point to CAD weakness.
Watchlist Trade Setups:
AUD/CAD Long: Strong Aussie is one we can target for longs against the Canadian dollar.
USD/CAD Long: US data has been strong, yields are rising, and seasonality supports USD strength.
CAD weakness may persist if October inflation or employment data misses again. Watch for dovish BoC rhetoric to confirm.
Again these views are my own and not trading advice, please make sure you do your own research before making any trading decision.