Huge increase in Canadian jobs
The unemployment rate is declining
Expected 25 basis points increase in BOC rate
The Canadian economy recorded a large increase in employment in December and the unemployment rate unexpectedly declined.
This strengthening has helped the Canadian dollar to trade stronger against the US dollar which was also shown by the release of the US NFP employment data.
At the time of writing, the dollar loonie was trading 0.3% higher at around 1.3403 against the greenback.
Looking at data released by Statistics Canada on Friday, an increase of 104,000 jobs was recorded, well above expectations for an increase of just 5,500 and jumping from 10,100 jobs in November.
The unemployment rate surprised the market by dropping to 5% from the previous record of 5.1%.
The BOC, which has raised rates by 400 basis points in 9 months to 4.25%, said further policy decisions will depend more on incoming data.
Even so, the Ivey survey PMI data showed that Canadian economic activity contracted significantly in December to 33.4 from 51.4, the lowest level since November.
Markets are now placing expectations for another 25 basis point increase in interest rates at a policy meeting scheduled for this month.
