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 August later this Friday at 12:30 GMT. The Canadian economy is anticipated to have added 15K jobs during the reported month, up sharply from the 30.6K fall reported in July. Meanwhile, the unemployment rate is expected to edge higher to 5.0% in August from the 4.9% previous.

Analysts at Citibank offer a brief preview of the report and seem more optimistic: “We expect a rebound in jobs of 30K in August. Wages in the monthly labor force survey have been volatile and suggest inflationary pressures caused by a tight labor market could be somewhat less embedded in Canada. As tighter monetary policy acts to cool demand, moderating wage growth will be a sign that inflationary pressures could ease somewhat faster in Canada.”

How could the data affect USD/CAD?

Ahead of the key release, the USD/CAD pair plunges below the 1.3000 psychological mark, hitting over a one-week low and is pressured by a combination of factors. A further recovery in crude oil prices from a multi-month low touched the previous day continues to underpin the commodity-linked loonie. Apart from this, the risk-on impulse drags the safe-haven US dollar further away from a two-decade high and further contributes to the heavily offered tone surrounding the major.

A stronger domestic data should provide an additional lift to the Canadian dollar and confirm a near-term bearish breakdown for the USD/CAD pair. Some follow-through selling below the 1.2970-1.2960 area, or the 50% Fibonacci retracement level of the August-September rally, will pave the way for additional losses. Spot prices might then accelerate the fall further towards testing the 1.2900 round figure.

Conversely, any disappointment from the Canadian jobs report is more likely to be overshadowed by the Bank of Canada's hawkish bias, indicating the need to raise interest rates further. This, in turn, suggests that the path of least resistance for the USD/CAD pair is to the downside. That said, worries about a deeper global economic downturn and hawkish Fed expectations should limit the downside for the buck, which, in turn, might lend support to the major.

Key Notes

  •  Canadian Jobs Preview: Forecasts from five major banks, gains again after two months of losses

  •  USD/CAD Analysis: Double-top, ascending channel breakdown in play ahead of Canadian jobs data

  •  USD/CAD: Prospects for a loonie rebound will improve in 2023 – Wells Fargo

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.