Forex » The Canadian Dollar and Employment Data to Watch

Jobs in October in Canada » Labor market recovery in the doldrums

  • Net employment change in Canada is expected at 10,000 in October.
  • The Bank of Canada surprised with a 50 basis point rate hike as fears of a pullback grew.
  • Ours of the Canadian dollar in forex is that of the employment data in Canada, plus the US NFP will hold the key to the USD/CAD pair.

the couple USD/CAD It is poised to extend its bullish momentum in forex as the October Canadian labor market report is unlikely to get the Canadian dollar (CAD) out of the woods.

Canada’s employment recovery is expected to slump again in October, after seeing job growth in September for the first time in four months. It should be noted that the sudden house of September is not produced by the fact that new wage earners are created, more than more than 20,000 people removed the labor force during the last and those who do not plan to return to the work. From June to August, the economy lost about 110,000 employees.

The country’s employment data for October will be released by Statistics Canada on sale at 12:30 GMT. The North American economy is estimated to have added 10,000 jobs in October, compared to a massive employment increase of 21,100 in September. The unemployment rate, however, is higher at 5.3% last month compared to 5.2% in September, while the participation rate is expected to remain stable at 64.7% over the forecast period.

Source: FX Street

At the time of the release of employment data in Canada, the United States (US) was also due to release its monthly labor market report. The US economy’s head of nonfarm payrolls received 200,000 in October versus 263,000 reserves previously. The unemployment rate is expected to rise from 3.5% to 3.6% in the reference month. An upside surprise for the payrolls figure could be on the horizon after the US ADP employment change jumped to 239,000 in October from the expected 195,000 and 192,000 previously.

The reaction to the US women’s job march is likely to overshadow the results of the Canadian jobs report in the USD/CAD pair, especially after the US dollar lost its hawkish talk From the Fed Chairman , Jerome Powell, Lords of Mercy’s Post-Political Press. conference. The Fed issued policy rates at 75 basis points, with great attention, plus Powell to declare that “there is some way to go” before it could slow its pace of reduction, as inflation showed no signs of slowing down. no signs of idling and let the rest of the work healthy.

On the other hand, the Bank of Canada surprised the markets last week after announcing a rate hike below attendants by 50 basis points. The central bank noted that it was nearing the end of its historic tightening campaign as it expected the economy to stagnate over the next three quarters.

Likely forex scenarios for the USD/CAD pair

A strong slowdown in the Canadian employment sector combined with a positive surprise on job gains in the United States could extend the Canadian dollar’s downward trend against its American counterparts. Even if the US payroll is not interested in impressing traders, the divergence between the Fed and the Bank of Canada will keep the Canadian dollar undermined in the courts in the foreign exchange market.

The daily technical setup for the USD/CAD pair is in favor of local traders, implying a likely extension of the US Dollar rally on the pace of the NFP or disappointing Canadian employment data.

USD/CAD daily chart

Forex » The Canadian Dollar and Employment Data to Watch
Source: FX Street

The USD/CAD pair closed above the critical 21-day short-term moving average (SMA) at 1.3706 on Wednesday. The 14-day Relative Strength Index (RSI) maintains midline strength, supporting the case for upside potential. Based on Canadian jobs data below employees, the pair could start a further advance towards the round level of 1.3800, above which the October 21st high at 1.3854 and the October 13th high at 1.3977 will be on buyers’ radars.

CAD bulls could get a reprieve in forex if Canadian jobs data beats expectations or if the US NFP disappoints Fed hawks what the US dollar rises. In this case, the spot could fall back towards the bullish trendline support at 1.3555, below the confluence of the bullish 50DMA and the October 27th low around 1.3490 will offer solid support.

By Dhwani Mehta, FXStreet

Dhwani holds a three-year degree in Business Administration, majoring in Finance and Compliance from IES Management College and Research Center in Mumbai, India. She has over 10 years of experience analyzing and covering global markets, with a specialization in Forex and Commodity markets. Dhwani is currently Senior Analyst and Head of Asian Session at FXStreet.

The opinions expressed here are only authorized by the authorities and do not necessarily reflect the views of Forex Quebec. Every investment and trading behavior has risks, you sometimes do your own research when making a decision.

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Disclaimer: The information and opinions contained in the report are provided for general information only and do not constitute an offer or a solicitation concerning the acquisition or sale of foreign exchange contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy and is not exhaustive, and assumes no liability for direct, indirect or consequential damages resulting from than anyone he trusts such information.

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