When is the monthly 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 January later this Friday at 13:30 GMT. The Canadian economy is expected to have lost 117.5K new jobs during the reported month as against a growth of 54.7K reported in December. Adding to this, the unemployment rate is anticipated to rise from 5.9% to 6.2% in January and the Participation Rate is likely to remain unchanged at 65.3%.

Analysts at NBF offered a brief preview and explained: “We are calling for a -175K print that could lead to a 3-tick increase of the unemployment rate to 6.3%, assuming the participation rate fell back to 64.9%. With the health situation already improving, we expect January’s losses to be quickly erased.”

How could the data affect USD/CAD?

Ahead of the key release, a fresh bout of a short-covering move pushed the USD/CAD pair to a four-day high, around the 1.2735 region. That said, a weaker tone around the US dollar should hold back traders from placing aggressive bets and cap gains amid bullish crude oil prices, which tend to underpin the commodity-linked loonie.

Meanwhile, the data is likely to be overshadowed by the simultaneous release of the US monthly jobs report (NFP), suggesting that any immediate market reaction is more likely to be short-lived. Nevertheless, any significant divergence from the expected readings would influence the Canadian dollar and infuse some volatility around the major.

From a technical perspective, any subsequent move up might confront some resistance near the 1.2765 region. Some follow-through buying should allow bulls to make a fresh attempt to conquer the 1.2800 round-figure mark. This is closely followed by the January swing high, around the 1.2815 region, which if cleared decisively should pave the way for a further near-term appreciating move.

On the flip side, the 1.2700 mark now seems to protect the immediate downside. Failure to defend the mentioned support would make the USD/CAD pair vulnerable to retest the weekly low, around mid-1.2600s. A convincing break below would expose the very important 200-day SMA, currently around the 1.2515 region, and the key 1.2500 psychological mark.

Key Notes

  •   Canadian Jobs Preview: Forecasts from five major banks, Omicron to tame employment growth

  •   USD/CAD retakes 1.2700, bullish oil prices might cap gains ahead of US/Canadian jobs data

  •   USD/CAD Analysis: Traders seem non-committed ahead of US/Canadian jobs data

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.