USD/CAD returned to parity as the Canadian labor markets bounced back in a big way in January, with the net employment change surging a greater-than-expected 46,400 after tumbling 18,700 in December. Meanwhile, the unemployment rate surprisingly fell to a 33-year low of 5.8 percent.
As we discussed in yesterday’s DailyFX Cross Market Reactions report, the January Ivey PMI reading suggested a solid improvement in this labor market figures. It appears that despite a sharp slowdown in business and trade activity at the end of 2007, conditions improved in early 2008 as domestic demand remains robust. Furthermore, the news indicates that the Canadian economy may be better equipped than previously expected to weather a massive slowdown – or worse, a recession – in the US.