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Canada is expected to add 156,600 jobs in September while the jobless rate is foreseen at 9.7% in the last month, the strongest in five months. The loonie is set for additional gains due to the reduction in unemployment and risk-on mood, FXStreet’s Dhwani Mehta reports. 

See – Canadian Employment Preview: Five major banks expectations for September jobs report

Key quotes

“The North American nation is expected to add 156,600 jobs, the smallest gain in five months. In August, the economy saw 245,800 jobs addition, still, the projected net change in employment is way higher than the pre-coronavirus period.”

“Despite the likely slowdown in the employment growth, the jobless rate is expected to drop sharply to 9.7% from 10.2% recorded in August, reflecting a declining trend over the five months. This could be reflective of an uptick in the participation rate, which is seen ticking higher to 64.8% in September vs. 64.6% booked previously.”

“A beat in the jobless rate and net employment change could offer extra legs to the ongoing rally in the Canadian dollar. Should the jobless rate report a single-digit growth while beating expectations, it could negate the impact of the slowdown in job growth.”

“The broader market sentiment will also play a pivotal driving the US dollar moves, in turn impacting USD/CAD. In the run-up to the jobs data release, the safe-haven greenback remains in a bearish consolidation phase, undermined by the optimism about US fiscal stimulus and expectations of a Joe Biden win at the November Presidential election.”