The 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 affect the movement of USD/CAD.
After a superb release in June, Employment Change remained almost unchanged in July, with a negligible decrease of -0.4 thousand. However, this beat the estimate of -4.2 thousand. The markets are expecting a stronger reading this time around, with an estimate of 6.2 thousand. Will the indicator improve and again beat the forecast?
Sentiment and Levels
The US economy appears to be heading on the right track, in contrast to the Canadian economy which is having more trouble. The loonie managed to hold its against the US dollar for quite some time, but USD/CAD has been gaining ground since last week. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels from top to bottom: 1.0652, 1.0523, 1.0446, 1.0340, 1.0250 and 1.0180.
5 Scenarios
- Within expectations: 3.0K to 9.0K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 9.1K to 14.0K: A reading above expectations would be an indication of growth in the Canadian economy, and could push the pair below one support level.
- Well above expectations: Above 14.0K: A sharp rise in employment numbers could propel the pair downwards, and two levels of support or more can be broken.
- Below expectations: 0.0K to 2.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
- Well below expectations: Below 0.0K: 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.
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