The Canadian Dollar is 'flying', propelled by better-than-expected employment data which has come as a complete surprise to a market unanimously prepared for worse data.

The Labour Force Survey showed that the Canadian economy created 23.7k new jobs in December compared to 29.6k previously, and 54.9k part-time jobs compared to 49.9k previously.

The Canadian Dollar rose almost a full percentage point after the release, climbing to GBP/CAD 1.6789 from a pre-release 1.6960, and USD/CAD 1.2371 from a pre-release 1.2520.

Analysts Reactions - another rate hike on the cards after stellar end to 2017

"The Canadian jobs report was well above expectations for net jobs added and the details of the report are impressive. Gains were widespread among sectors with 12 major categories being up among 16. This was also the case regionally with all provinces posting gains, a first in five years.

"The unemployment rate is now at its lowest in 40 years thanks to a 5 tenth drop in the youth unemployment rate.

"Not surprisingly, tight labour markets are fostering higher wage inflation. Hourly earnings have increased at a 4.4% seasonally annualized rate over the past six months, the best showing in over two years."

Nick Exharos, Analyst, CIBC Economics.

"The Canadian data flow rung in the New Year with panache, with the jobs report for December stacking on another spectacular gain.

"Given the tremendous progress made in narrowing labour market slack—an area highlighted by the Bank of Canada in recent communication—we think that today’s report is enough to push Governor Poloz into a rate hike later this month."

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