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 February later this Friday at 13:30 GMT. The economy is estimated to have added 75K jobs in February as against a loss of 212.8K jobs in the first month of 2021. This would also mark the first positive reading in the previous three months, enough to lower the unemployment rate to 9.2% from 9.4% previous.
Meanwhile, analysts at TDS sounded more optimistic about Friday's employment details: “We look for job growth of 150K in February as the rollback of emergency measures across Eastern Canada facilitates a rebound for industries heavily affected by recent lockdowns. Part-time employment should lead job growth which will translate into more modest growth in hours worked, while the unemployment rate should drift lower to 9.0% (on higher participation).”
How could the data affect USD/CAD?
The BoC on Wednesday chose to highlight the weakness in the labour market. Hence, the latest jobs numbers will be looked upon for clues about the central bank's policy outlook and play a key role in influencing the Canadian dollar in the near-term. A stronger reading will be enough to fuel speculations that the BoC could start pulling back on stimulus as soon as next month. Conversely, a slight disappointment is more likely to be negated by the underlying bullish sentiment surrounding crude oil prices, which tend to underpin the commodity-linked loonie.
That said, a fresh leg up in the US Treasury bond yields provided a goodish lift to the US dollar demand and should extend some support to the USD/USD pair. This, in turn, warrants some caution for bearish traders and positioning for any further depreciating move. Hence, investors will probably wait for more evident to see that there is a sustained recovery for the Canadian dollar to move higher significantly from current levels.
As Dhwani Mehta, senior analyst at FXStreet writes: “If the jobs data beat estimates, we could see the spot extending its five-day bearish momentum towards 1.2500, below which the February 25 low at 1.2468 could be aimed for. If the data disappoints, markets could take that as an excuse to unwind their long CAD positions, which could drive USD/CAD back towards 1.2670 levels.”
Key Notes
• Canadian Jobs Preview: Labor market recovery to regain traction, room to rise for CAD?
• Canadian Employment Preview: Forecast from five major banks for February jobs report
• USD/CAD Price Analysis: Attempted recovery stalls near trading range support breakpoint
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.