Is Canada Losing Steam?

Employment numbers in the US may have dominated the markets on Friday morning, but the US was not the only country reporting employment data. Disappointing data out of Canada indicated that the country's economy might be slowing significantly. Unemployment in Canada printed at 7.4%. Expectations were for a figure of 7.3%. Further, the expectations were for positive employment growth—the report showed that the Canadian economy actually lost jobs. This comes in contrast to recent years, which has seen the Canadian economy recover spectacularly in the wake of the financial crisis of 2008. Canada's economy may have benefitted from the tremendous bull-run experienced in the commodity sector—particularly crude oil. Canada's economy is, in large part, focused on the exportation of natural resources. Canada's oil shale has been a large focus for the growth of the country's economy. The Canadian government was frustrated when an environmentalist group was able to successful halt the placement of a pipeline that would bring oil from Canada's shale to the US. The plans for that pipeline have been restored. Still, commodities experienced a slight pullback over the summer, and those depreciating prices may continue to affect the Canadian economy going forward. If the global economy faces contraction, Canada may continue to suffer as the demand for natural resources falls. Of course, as China has switched back to easing, and the US economy has appeared to begin recovering—at least modestly—this lull in Canada may prove to be purely temporary.

Traders who believe that this period for Canada is a temporary bump in the road might want to consider the following trades:

Traders who believe that Canada will experience some weakness from here may consider alternate positions: