Canadian employment details overview
Statistics Canada is scheduled to publish the monthly jobs report for August later this Friday at 12:30 GMT. Despite signs of an economic slowdown, the Canadian economy is expected to have added 100K jobs during the reported month. Meanwhile, the unemployment rate is projected to drop from 7.5% in July to 7.3%.
Meanwhile, Dhwani Mehta, Senior Analyst and Editor at FXStreet, offered her take on the report and explained: “A disappointment in the Canadian employment figures cannot be ruled out amid the third wave of the COVID-19 pandemic-led restrictions in the country. Restaurants, retailers and hospitality companies have all reported that hiring has been difficult because Canadians are seeking more stable employment, jobs they can complete from home and assurances that their workplaces won't be temporarily closed if another wave of the virus arrives.”
How could the data affect USD/CAD?
Ahead of the key release, a goodish pickup in crude oil prices underpinned the commodity-linked loonie and dragged the USD/CAD pair to three-day lows amid renewed US dollar selling bias. A stronger report should provide an additional boost to the Canadian dollar and set the stage for additional losses for the major.
That said, expectations for an imminent Fed taper announcement, along with a solid rebound in the US Treasury bond yields should act as a tailwind for the USD and help limit losses for the major. A softer print will reaffirm the outlook and prompt some short-covering move around the major.
Meanwhile, given the proximity of Canada's federal elections on September 20, any immediate market reaction is likely to be limited and have little impact on the pair's near-term trajectory.
Key Notes
• Canadian Jobs Preview: Employment sector improves but uncertainty prevails
• Canadian Jobs Preview: Forecasts from five major banks, extending recovery momentum
• USD/CAD: Loonie still points to the downside in the short-term – MUFG
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.
