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 is bullish for the Canadian dollar.
Update: Canadian jobs report beats with +12.1K, but unemployment rises to 7.1%
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 is often a market-mover.
Employment Change posted an excellent gain of 12.0 thousand in August, easily beating the estimate of -4.8 thousand. The markets are expecting another strong reading in August, with an estimate of 10.5 thousand. Will the indicator match or beat this prediction?
Sentiment and Levels
The Canadian dollar has posted some gains of late, thanks to stronger oil prices. The markets are still hopeful of a rate hike by the Federal Reserve before the end of the year, so any hints in this regard could bolster the US dollar. So, the overall sentiment is neutral on USD/CAD towards this release.
Technical levels from top to bottom: 1.3346, 1.3213, 1.3165, 1.3063, 1.2930 and 1.2798.
5 Scenarios
- Within expectations: 7.0K to 14.0K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 14.1K to 18.0K: 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 18.0K: A sharp rise in employment numbers could propel the pair downwards, and a second support level could be broken.
- Below expectations: 3.0K to 6.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
- Well below expectations: Below 3.0K: A poor reading will likely hurt confidence in the loonie and the pair could break above a second resistance level.
For more on USD/CAD, see the USD/CAD.