Canadian employment change is one of the most important Canadian indicators, which often 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: Canadian employment falls only 6.4K, unemployment rate 6.8% – USD/CAD down
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 should be treated as a market-mover.
After a very weak showing in April, Employment Change bounced back in June, posting a superb gain of 58.9 thousand. This crushed the estimate of 10.2 thousand. The roller coaster is expected to continue in the June report, with the markets bracing for a decline of 9.0 thousand.
Sentiment and Levels
US data has been mixed of late, but the Fed seems to be on track for a hike in September. This week’s Canadian numbers have sputtered, as Trade Balance and Building Permits both fell short of expectations. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels from top to bottom: 1.3063, 1.2924, 1.2798, 1.2646, 1.2541 and 1.2386.
5 Scenarios
- Within expectations: -12.0K to -6.0K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: -5.9K to -2.0K: A reading which is better than anticipated the Canadian could push the pair below one support level.
- Well above expectations: Above -2.0K: A slight decline or gain by the indicator could result in a second support level being broken.
- Below expectations: -12.1K to -16.1K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
- Well below expectations: Below -16.1K: A sharp decline 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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