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 jobs report for February later this Friday at 13:30 GMT. The Canadian economy is anticipated to have added 160K new jobs during the reported month, marking a solid rebound from the 200K losses reported in January. The unemployment rate is also expected to improve from 6.5% and fall to 6.2% in February.

Analysts at RBC Economics offered a brief preview and sounded more optimistic about the report: “We expect February’s job report will retrace three-quarters of the 200K jobs lost in January. Hours worked are also expected to climb after falling 2.2% in January due to elevated worker absenteeism. With the economic impact of the virus fading, labour shortages will remain a more pressing issue for many businesses than a lack of orders. Indeed, high demand for workers and shrinking numbers of unemployed people mean wages are likely to rise.”

How could the data affect USD/CAD?

Ahead of the key release, a combination of factors acted as a headwind for the USD/CAD pair and kept a lid on the attempted intraday bounce to the 1.2800 neighbourhood. An uptick in crude oil prices underpinned the commodity-linked loonie, while a goodish move up in the global equity markets weighed on the safe-haven US dollar. A stronger than expected Canadian employment details would be enough to provide an additional boost to the domestic currency and prompt fresh selling around the major.

Conversely, a disappointing report is likely to be overshadowed by the latest optimism over a possible diplomatic solution to the Russia-Ukraine conflict, which might continue to weigh on the USD and lend support to the USD/CAD pair. This, in turn, supports prospects for some near-term downside for the pair and an extension of this week's retracement slide from the 1.2900 mark, or the YTD high.

Meanwhile, Valeria Bednarik, Chief Analyst at FXStreet, offered a brief technical outlook for the pair: “The USD/CAD is in a long-term consolidative phase, confined to a roughly 300 pip range for the last six weeks. Crude oil swings have had a limited long-term impact on the currency for now, which rather moves accordingly to sentiment.”

Valeria also outlined important technical levels to trade the major: “The employment report has to be quite a shocker to interrupt sentiment-related trading and spur some action one way or the other. A critical resistance level is 1.2900, where the pair topped this week. Beyond that level, 1.2963, this year’s high, is the next probable bullish target.”

“On the other hand, 1.2870 is a relevant support area, as there are multiple intraday highs/lows around it ever since late January. A break below it should favor a bearish extension towards the 1.2800 figure,” Valeria added further.

Key Notes

  •   Canada Employment Preview: Too much pressure on the BOC

  •   Canada Employment Preview: Forecasts from five major banks, jobs powering back from Omicron blow

  •   USD/CAD consolidates above mid-1.2700s, traders await Canadian jobs report

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.