The 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 higher than forecast could lift the loonie.
Here are the details and 5 possible outcomes for USD/CAD.
Published on Friday at 11:00 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 move markets.
The employment change indicator had a dismal September, with a reading of -5.5K compared to a forecast of 24.2K. The forecast for October is a healthy 19.6K. If the actual figures are again well below the market expectation, the Canadian dollar, which has taken a beaten in the last few weeks, could continue to fall against the major currencies.
Sentiment and Levels
The Canadian economy is showing some signs of an economic downturn, notably, negligible GDP growth recently. The global slowdown and high Canadian dollar continues to hurt the demand for exports, such as oil, and this may push down the loonie. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels from top to bottom: 1.0750, 1.0677, 1.0510, 1.0530, 1.0373, 1.03 and 1.02.
5 Scenarios
- Within expectations: 14K to 25K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 26K to 32K: 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 32K: A sharp rise in employment numbers could propel the pair downwards, and two levels of support or more can be broken.
- Below expectations: 7.5K to 13.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
- Well below expectations: Below 7.5K: Another poor reading will hurt confidence in the loonie, and the pair could break two resistance levels.
For more on the Canadian dollar see the USD/CAD.