Feel like trading for some last-minute pips before the week ends?
Canada is printing its labor market data on Friday!
Here are points you need to know if you’re planning on trading the event:
Event in Focus:
Canada’s May Employment Data: Employment Change, Unemployment Rate
When Will it Be Released:
June 9, 2023 (Friday) 12:30 pm GMT
Use our Forex Market Hours tool to convert GMT to your local time zone.
Expectations:
- Net of 40,000 jobs added, slower than the 41,400 jobs added in April
- Unemployment rate to inch higher to 5.1% after remaining at 5.0% for five consecutive months
Relevant Data Since Last Event/Data Release:
- The S&P Global manufacturing PMI fell from 50.2 to a contractionary 49.0 over lower output, new orders, and employment
- Canada’s IVEY PMI dipped from 56.8 to 53.5 in May but the employment component ticked higher from 55.8 to 56.2
Previous Releases and Risk Environment Influence on the Canadian Dollar
May 5, 2023
Overlay of CAD vs. Major FX: 1-Hour Forex Chart by TV
Event Results / Price Action:
The economy added a net of 41,400 jobs in April, almost double the 21,600 increase estimates and higher than March’s 34,700 uptick.
The additions were enough to keep the unemployment rate steady, as it remained at 5.0% for a fifth consecutive month when analysts saw an uptick to 5.1%.
CAD jumped across the board at the employment change beat as it supported a hawkish speech made by BOC Gov. Macklem the day before the report’s release.
Risk Environment and Intermarket Behaviors:
Concerns over Uncle Sam’s regional banks and debt ceiling fanned a risk-averse trading environment early that week.
Risk appetite improved mid-week, however, and a hawkish speech by Gov. Macklem helped turn things around for the Loonie.
The risk and CAD-friendly trading environment likely contributed to CAD’s sharp upswings when the better-than-expected numbers came out.
April 6, 2022:
Overlay of CAD vs. Major FX: 1-Hour Forex Chart by TV
Event Results / Price Action:
Canada added a net of 34,700 jobs in March, higher than February’s 21,800 addition and the expected 10,200 uptick.
Meanwhile, the unemployment rate stayed at 5.0% for the fourth month in a row instead of rising to 5.1% as markets had expected.
Interestingly, the Loonie gained against currencies that it lost the most pips to when the U.S. posted weak JOLTS jobs data on Tuesday. CAD rose against JPY, AUD, NZD, and GBP but mostly maintained its ranges against CHF, EUR, and USD.
Risk Environment and Intermarket Behaviors:
The U.S. printed its NFP data on Friday (Canada’s report was out on Thursday) so CAD traders were free to act on Canada’s job numbers alone during the time of their release.
The shortened Easter trading week and a steep downswing on Tuesday also likely contributed to CAD’s upswings when the net job additions beat estimates.
Price action probabilities:
Risk sentiment probabilities: A lack of fresh major catalysts and/or surprises has price volatility and direction somewhat limited so far this week. Traders are fixated on global growth concerns amidst a high interest rate environment, as well as unflattering economic signals this week including China’s weaker-than-expected exports numbers and weaker-than-expected global PMI updates.
The focus could remain on the themes above without a major news surprise, likely supporting risk-off vibes going into the Friday Canadian jobs report.
Canadian Dollar scenarios:
Potential Base Scenario:
The U.S. has already printed its jobs data last week so CAD traders won’t be distracted by other data releases. That is, CAD’s immediate reaction may directly correlate with Canada’s labor data beat or miss.
Given that the employment change has surprised to the upside in 7 of the last 8 releases, we could see another upside surprise this week, although the odds of certainty are a bit lower with the S&P PMIs and Ivey PMI employment indexes contradicting each other.
Given the trend of resilient job environments we’re seeing across the major economies, we’re likely to see another strong jobs print from Canada, which could boost the Loonie higher short-term as it gives the BOC another reason to stay hawkish.
But that boost higher may be limited if Loonie bears can’t pull CAD back before the jobs event, the result of strong pop higher on the surprise rate hike from the Bank of Canada to 4.75% this week.
If CAD moves higher into the print, or even stays at current prices, there is a possibility of CAD selling off on profit taking ahead of the weekend, barring a major CAD jobs upside surprise and/or a fresh broad risk-on catalyst hitting the news wires.
Potential Alternative Scenario:
If broad risk aversion sentiment extends through to Friday trading, and/or if Canada’s labor market numbers surprise to the downside below expectations/previous, then the Loonie could see some give back from the Bank of Canada rate hike induced rally this week.
In that scenario where we see both broad risk-off and worse-than-expected May jobs numbers, then CAD could lose pips against currencies that have hawkish central banks (e.g., AUD, NZD, & USD), or even against the safe-haven JPY.
