USD/CAD: Trading the Canadian Employment Change

Canadian Employment Change is an important leading indicator which provides a snapshot of the health of the employment market.  A reading higher than the forecast is bullish for the Canadian dollar.

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 can have  a significant effect on  the movement of USD/CAD.

The indicator plunged in July, coming in at -31.2 thousand. This was well short of the forecast of 10.2 thousand. This was the weakest reading since November. The markets are expecting a strong turnaround in August, with a forecast of 16.0 thousand.

Sentiment and Levels

Although recent US numbers have been soft, there is a strong likelihood that the Federal Reserve will raise rates before the end of the year.  As well, the US economy is in better shape than its northern neighbor. So, the overall sentiment is bullish on USD/CAD towards this release.

Technical levels from top to bottom: 130.81, 1.2990, 1.29, 1.2804, 1.2663 and 1.2562.

5 Scenarios

1. Within expectations: 13.0K to 19.0K: 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: 19.1K to 23.0K: 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 23.1K: A sharp rise in employment  numbers could propel the pair downwards, and two levels of support could be broken.
4. Below expectations: 8.0K to 12.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
5. Well below expectations: Below 8.0K: Another poor reading  could undermine  confidence in the Canadian economy, and the  pair could break two  resistance levels.

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