Canadian jobs preview: Determining the direction for CAD as it stands at the crossroads

Canada publishes its jobs report on Friday, June 8th, at 12:30. Back in April, the Canadian economy lost 1,100 positions, a very disappointing outcome. The general notion was that the nation got out of its long winter slump and growth, including in jobs, would pick up. 

The publication for May is already projected to show a Spring recovery. Net Employment Change is expected to rise by 20,000, an increase that is within the normal range. The Unemployment Rate is forecast to remain unchanged at 5.8% with a stable Participation Rate at 65.4%. 

As usual with Canada's labor numbers, the composition of jobs may also have its say, especially if the numbers come out within estimations. 

All in all, expectations are reasonable, not too hot and not too cold. Any deviation will likely have a significant impact on the loonie and will help it choose a direction as it stands at the crossroads.

CAD between the upbeat BOC and Trump's tariffs

The Canadian Dollar struggles between two opposing forces. The Bank of Canada came out with a hawkish statement, removing the need for caution on interest rates and accommodative monetary policy while expressing satisfaction with GDP growth, wage growth, and consumption.

The statement that accompanied the May decision lay the ground for a rate hike in July, something that seemed more remote before the meeting. The hawkish bias seen on May 30th did not last for too long.

On May 31st, the Trump Administration announced the implementation of steel and aluminum tariffs on Canada, Mexico, and the EU. The move was a spanner in the wheels of the NAFTA negotiations. The angry response by Canada's PM Trudeau and the potential counter-tariffs also added fuel to the fire.

Canada is dependent on trade with the US and the deterioration of relations weighed on the C$.

In the broader scheme of things, the USD/CAD is still within the familiar ranges, looking for a new direction. The top-tier Canadian jobs report could move the needle in either direction.

USD/CAD levels to consider

The very top line to watch is 1.3125 which was the peak in 2018. 1.3050 served as a line of support back in March and also as a high point in May. The round number of 1.3000 still plays an important psychological role. 

Next, 1.2930 capped the pair on May 15th and remains relevant. The 1.2860 swing low of June 6th is then followed by 1.2815 which was a low point on May 31st. 

The 1.2750 and 1.2730 levels were low points in mid-May. The next levels are 1.2680 and 1.2625 which date back to April.

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