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 is bullish for the loonie.
Here are the details and 5 possible outcomes for USD/CAD.
Published on Friday at 12:00 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 is often a market-mover.
Since an awful performance last November, its worst in over two years, the indicator has rebounded nicely. The January reading was back in postive territory, at 17.5. The market forecast is calling for a modest increase this month, with a prediction of 23.3K. If the indicator can meet the market expectations, this will be its third straight rise. Watch for the loonie to gain some momentum if this upward trend continues.
Sentiment and Levels
The loonie is benefitting from higher oil prices, as well as the easing of monetary rates in the US. The unemployment rate of 7.5% is rather high, and is still a concern. If the two employment indicators show some improvement, the loonie will likely respond with a rise. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels from top to bottom: 1.02, 1.0143, 1.0070, 1.00, 0.99, 0.9830 and 0.9780.
5 Scenarios
- Within expectations: 18.0K to 28.0K: 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: 28.1K to 33.0K: 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 33.0K: A sharp rise in employment numbers could propel the pair downwards, and two or more levels of support can be broken.
- 4. Below expectations: 12.0K to 17.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
- 5. Well below expectations: Below 12.0K: A poor reading will hurt confidence in the loonie, and the pair could break two or more resistance levels.
For more on USD/CAD, see the USD/CAD.