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USD/CAD: Trading Canadian jobs October 2011

The Canadian employment change is an important leading indicator which has a significant impact on the markets. Traders and analysts carefully scrutinize employment figures, and a reading higher than forecast could lift the loonie.

Here are the details and 5 possible outcomes for USD/CAD.

Published on Friday at 11:00 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of the employment change indicator, simultaneously with the unemployment rate, is highly anticipated and can move markets.

The employment change indicator had a dismal September, with a reading   of -5.5K compared to a forecast of 24.2K. The forecast for October is a healthy 19.6K. If the actual figures are again well below the market expectation, the Canadian dollar, which has taken a beaten in the last few weeks, could continue to fall against the major currencies.

Sentiment and Levels

The Canadian economy is showing some signs of an economic downturn, notably, negligible GDP growth recently. The global slowdown and high Canadian dollar continues to hurt the demand for exports, such as oil, and this may push down the loonie. So, the overall sentiment is bullish on USD/CAD towards this release.

Technical levels from top to bottom: 1.0750, 1.0677, 1.0510, 1.0530, 1.0373, 1.03 and 1.02.

5 Scenarios

  1. Within expectations: 14K to 25K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range,  without breaking any levels.
  2. Above expectations: 26K to 32K: A reading above expectations would be an indication  of growth in the Canadian economy,  and could  push the pair  below one  support level.
  3. Well above expectations: Above 32K: A sharp rise in employment  numbers could propel the pair downwards, and two levels of support  or more can be broken.
  4. Below expectations: 7.5K to 13.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
  5. Well below expectations: Below 7.5K: Another poor reading will hurt confidence in the loonie, and the  pair could break two  resistance levels.

For more on the Canadian dollar  see the  USD/CAD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.