When is the Canadian monthly jobs report and how could it affect USD/CAD?

Canadian employment details overview

Statistics Canada is scheduled to publish the monthly employment details for May later this Friday at 12:30 GMT. The Canadian economy is anticipated to have added 30K jobs during the reported month, up from the 15.3K rise reported in April. Meanwhile, the unemployment rate is expected to hold steady at 5.2% in May.

Analysts at RBC Economics sounded less optimistic and offered a brief preview of the report: “We expect a gain of 15K jobs – matching the increase in April. Employment growth has slowed dramatically in recent months, but not due to any shortfall in labour demand. Canada's number of job openings was still running ~70% above pre-pandemic levels in May. But the number of workers available for hire is now minimal, with the unemployment rate at 5.2% in April, its lowest level since at least 1976. And labour shortages are widespread by sector. That means additional demand for workers from now on will show up more in wage growth than in employment counts.”

How could the data affect USD/CAD?

The data is likely to be overshadowed by the simultaneous release of the crucial US consumer inflation figures, which would determine the Fed's monetary policy tightening path. That said, a significant divergence from the expected readings should influence the Canadian dollar and provide some meaningful impetus to the USD/CAD pair. Heading into the key data risks, the pair shot to a fresh two-week high, closer to mid-1.2700s amid modest US dollar strength. Bulls seemed rather unaffected by an uptick in crude oil prices, which tend to benefit the commodity-linked loonie.

Some follow-through buying beyond the 1.2765-1.2770 region should allow bulls to reclaim the 1.2800 mark. The said handle coincides with the 50% Fibonacci retracement level of the 1.3077-1.2518 downfall, which if cleared decisively will suggest that the USD/CAD pair has formed a near-term bottom and pave the way for additional gains. Spot prices could then accelerate the momentum further towards the next relevant hurdle near the 1.2765-1.2770 supply zone en-route the 1.2800 round figure.

On the flip side, the 1.2700 mark now seems to protect the immediate downside ahead of the 1.2655 confluence support, comprising the very important 200-day SMA and the 23.6% Fibo. level. Failure to defend the said support could drag the USD/CAD pair back towards the 1.2600 round figure en-route the 1.2520-1.2515 support, or the monthly low touched earlier this week.

Key Notes

  •   Canadian Employment Preview: Forecast from four major banks, additional jobs gain in May

  •   USD/CAD Analysis: Bulls likely to seize control above 1.2700, US CPI/Canadian jobs data eyed

  •   USD/CAD: Limited appreciation potential for the loonie in the medium-term – Commerzbank

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.