The Canadian dollar gained ground against the yen yesterday following the release of better-than-anticipated employment change data for May. The weak Japanese household spending data for April also fueled the Canadian dollar’s uptrend against the yen. Overall, the CAD/JPY pair rallied from a low of 113.52 to a high of 114.37.
According to Japan’s Statistics Bureau, the country’s household spending grew by 0.50% y-o-y in April after a 1.20% decline in the preceding month but missed forecasts of a 0.60% increase. The provided statistic indicates the first increase since February 2023, as consumer spending rebounded by 3.50% y-o-y for housing in April after a decline of 5.80% in March.
Likewise, medical care spending rose by 1.20% in April after a decrease of 0.70% in the previous month. Furniture and household utensils recorded an increase of 1.90% in April after a 0.50% fall in the earlier month. Medical care spending grew by 1.20%, while other consumption expenditures surged 10% year-on-year in April.
Notably, spending on education jumped 25.90% y-o-y in April, following an 11.20% increase in March. On the contrary, expenses for food declined 2.70% y-o-y in April. Similarly, transport and communication expenses plunged 10.20% year-over-year in April. The fuel, light, and water charges decreased by 1.90%. Also, culture and recreation dipped 9.20% y-o-y in April.
On an m-o-m basis, Japan’s spending fell by 1.20% in April after a 1.20% rise in March. Economists had anticipated a reading of 0.20%. The stated number mirrors the first decline since January.
The consumption data was released a day after Bank of Japan board member Toyoaki Nakamura, known for his dovish stance, expressed concerns about the recent sluggishness in domestic consumption. He indicated that inflation may not reach the central bank’s 2% target from fiscal 2025 onwards if these conditions continue.
According to Statistics Canada, the nation’s economy gained 26,700 jobs in May, following an addition of 90,400 jobs in the preceding month, surpassing forecasts of 24,800.
On a y-o-y basis, Canada’s economy added 402,000 jobs in May.
Employment grew by 30,000 jobs in health care and social assistance. The finance, insurance, real estate, rental, and leasing sectors added 29,000 jobs. Likewise, business, building, and other support services posted 19,000 jobs. Accommodation and food services added 13,000 jobs.
On the contrary, the construction sector lost 30,000 jobs. Similarly, the transportation and warehousing sectors lost 21,000 jobs. Also, the utilities sector lost 5,400 jobs.
Canada’s part-time employment grew by 62,000 in May. On the other hand, full-time employment fell by 36,000 in May. On a y-o-y basis, part-time and full-time employment rose by 140,000 and 263,000, respectively, in May 2024.
The statistical organization also stated that Canada’s unemployment rate rose to 6.20% in May from 6.10% in April. Notably, Canada’s unemployment rate grew by 0.90% on a y-o-y basis. The reported figure was in line with economists’ estimates.
Total hours worked were unaltered in May. On a y-o-y basis, total hours worked rose by 1.60% in May 2024.
The better-than-anticipated employment change data is expected to keep the CAD/JPY pair slightly bullish in the short term.
Technically, the CAD/JPY pair is rising after testing the support at 113.05. The next resistance is anticipated to be only near 115.60. Additionally, the currency pair is trading above its 50-day moving average, while the MACD is showing a positive reading. Therefore, we anticipate the CAD/JPY pair to remain in an uptrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
