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 which is higher than forecast is bullish for the Canadian dollar.
Here are the details and 5 possible outcomes for USD/CAD.
Published on Friday at 13:30 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 Canadian Unemployment Rate, is highly anticipated and is often a market-mover.
Employment Change has been sizzling for the past two releases, so much so that many analysts are saying these outstanding numbers simply don’t reflect a slowdown in the Canadian economy. The market is predicting a much smaller increase this time around, with an estimate of a modest gain of 4.5 thousand. If the indicator can beat the forecast, it could give some wings to the Canadian dollar.
Sentiment and Levels
USD/CAD remains close to the parity line, and the loonie has managed to remain above the line throughout the week. Despite the relatively dovish rate decision in Canada, the BOC is still more hawkish than the Federal Reserve, which offered more of the same at its recent policy meeting. All in all, the Canadian economy is still doing well, and we could see the pair drop back down to lower levels. This week’s key Canadian releases will be a important factor as to which direction the pair takes. So, the overall sentiment is bearish on USD/CAD towards this release.
Technical levels from top to bottom: 1.01, 1.0066, 1.00, 0.9950, 0.9910 and 0.9880.
5 Scenarios
- Within expectations: 0.0K to 8.0K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 8.1K to 12.0K: 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 12.0K: A sharp rise in employment numbers could propel the pair downwards, and two or more levels of support can be broken.
- Below expectations: -4.0K to -0.1K: A reading in negative territory could push USD/CAD upwards, with one resistance level at risk.
- Well below expectations: Below -4.0K: A poor reading could hurt confidence in the loonie, and the pair could break two or more resistance levels.
For more on USD/CAD, see the Canadian dollar forecast.
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