When is the Canadian jobs report and how could it affect USD/CAD?
Canadian employment details overview
Statistics Canada is scheduled to publish the monthly jobs report for July later this Friday at 12:30 GMT. The labor market report is expected to show another solid increase in hiring for July, with the addition of 177.5K new jobs. The combined hiring in June and July sums up to more than the number lost during the third wave – April and May. Adding to this, the unemployment rate is projected to drop from 7.8% to 7.4% during the reported month.
As Joseph Trevisani, Senior Analyst at FXStreet explains: "Canada’s resource-based economy has benefited from the strong rebound in commodity prices and crude oil this year, which provides about 11% of GDP. Employment reflects this strong economic base."
How could the data affect USD/CAD?
Ahead of the key release, the USD/CAD pair was seen trading with modest gains just above the key 1.2500 psychological mark amid a modest US dollar strength. A stronger-than-expected report might provide a modest lift to the Canadian dollar and exert some pressure on the major. That said, the market reaction is likely to be overshadowed by the post-NFP volatility. Given that the next policy move by the Fed is dependent on how the labor market performs in the next few months, the focus will remain on the US monthly jobs report. Nevertheless, any significant divergence from the expected reading might still produce some short-term trading opportunities around the major.
According to Joseph Trevisani: "Trading bias is modestly higher as the recovery has not reached the first Fibonacci level of the above USD/CAD drop, and US July job numbers are a looming risk. A sensible goal is 1.2600, the base of the brief head-and-shoulders pattern and the 50% Fibonacci retracement."
Key Notes
• Canada Net Change in Employment July Preview: Can we get some respect here?
• Canadian Employment Preview: Forecasts from five major banks, full replacement of pandemic losses
• USD/CAD Price Analysis: Consolidates around 1.2500, awaits US/Canadian jobs
About the Employment Change
The employment Change released by Statistics Canada is a measure of the change in the number of employed people in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive, or bullish for the CAD, while a low reading is seen as negative or bearish.
About the Unemployment Rate
The Unemployment Rate released by Statistics Canada is the number of unemployed workers divided by the total civilian labour force. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labour market. As a result, a rise leads to weaken the Canadian economy. Normally, a decrease of the figure is seen as positive (or bullish) for the CAD, while an increase is seen as negative or bearish.
would bring its labor economy to a 94.5% recovery of the lockdown job destruction of last March and April.
An increase of 177,500 positions is expected as Canada extends its reopening after lockdowns in the spring. The Unemployment Rate is set to drop from 7.8% to 7.4%.
A temporary setback in the Canadian labour-market recovery is expected to have prolonged for the second straight month in May amid the reimposition of coronavirus restrictions in some provinces. Following the loss of 207.1K jobs in April, economists expect that the economy shed another 20K jobs in May and the unemployment rate rose to 8.2% from 8.1% in the previous month.