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 is bullish for the loonie.
Update: USD/CAD leaps on weak Canadian employment data
Here are the details and 5 possible outcomes for USD/CAD.
Published on Friday at 12:30 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 is often a market-mover.
After a very weak showing in May, Employment Change improved nicely in June, posting a gain of 25.8 thousand. This beat the estimate of 24.5 thousand. The markets are expecting another strong reading this time around, with the estimate standing at 26.2 thousand.
Sentiment and Levels
US releases have looked strong since a weak GDP reading, particularly employment numbers. The Fed has said that it plans to wind up QE by October, and continuing tapers is bullish for the US dollar. If Canada’s key releases fail to meet expectations this week, the loonie could slip. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels from top to bottom: 1.0815, 1.0737, 1.0660, 1.0526, 1.0422 and 1.0271.
5 Scenarios
- Within expectations: 22.0K to 30.0K: 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: 31.1K to 36.0K: 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 36.0K: A sharp rise in employment numbers could propel the pair downwards, and a second support level could be broken.
- 4. Below expectations: 17.0K to 21.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
- 5. Well below expectations: Below 17.0K: A poor reading will likely hurt confidence in the loonie and the pair could break above a second resistance level.
For more on USD/CAD, see the Canadian dollar forecast.
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