Employment in Canada increased 35,800 in August after unexpectedly contracting 9,300 in the previous month, which exceeded forecasts for a 30,000 rise.
Meanwhile, the jobless rate unexpectedly advanced to 8.1% from 8.0% in July as discouraged workers returned to the labor force, and conditions are likely to improve going forward as the economic recovery gathers pace. The breakdown of the report showed full-time positions increased 79,900 following the 139.0 contraction in July, while part-time employment slipped 44,100 to mark the first decline in three-months. Given the recent developments, the Bank of Canada may see scope to normalize monetary policy further throughout the remainder of the year as businesses continue to increase production and employment.
Speculation for another rate hike in October would instill a bearish outlook for the USD/CAD, which could lead the exchange rate to retrace the advance from August. The dollar/loonie immediately spiked to a low of 1.0287 following the better-than-expected data, but the corrective retracement subsequent to the release has pushed price action back above 1.0300 going into the North American trade. As equity futures foreshadow a higher open for the U.S. market, risk appetite could drive the exchange rate back towards the lows as the economic docket remains fairly light for Friday.