Could Canadian employment data change loonie’s direction? – Forex News Preview
May 3, 2023 1:27 pm
The Canadian employment report for the month of April is scheduled to be released at 12:30 GMT; however, it is possible that the report will not receive much attention as the Bank of Canada’s decision in April kept the target for its overnight rate steady at 4.5%. On Tuesday, the Canadian Dollar was one of the major currencies that performed the poorest relative to its peers.
Canada’s unemployment rate expected to rise
In March of 2023, the unemployment rate in Canada remained at 5% for the fourth month in a row, which is close to the record low of 4.9% that was seen in June and July 2022. This result is in contrast to the market projection, which was for a rate of 5.1%. Thursday’s employment report could provide fresh evidence for any hints for next policy decision. The employment change is expected to mark a soft increase of 20.0K versus 34.7K before, lifting the unemployment rate slightly higher to 5.1%.
BoC held rates steady
As expected, the Bank of Canada kept its goal for the overnight rate at 4.5% at its April 2023 meeting, and it reaffirmed its commitment to closely monitoring economic data ahead of any future policy rate decisions. In March, the annual inflation rate in Canada dropped to 4.3%, the lowest level since August of 2021. This reduction was in line with market expectations and came after the rate had increased to 5.2% in the previous month. The strong base-year effects for energy costs contributed to the decline. Following a brief pause in its tightening of monetary policy, the Bank of Canada (BoC) projected that inflation would return to 3% by the end of the third quarter. The result was roughly consistent with those projections.
Technical outlook: Loonie and oil
Over the past 24 hours, the Canadian dollar has been one of the worst performing major currencies. The decline in the value of the loonie came the day after WTI crude oil prices fell by almost 5.6%. Oil has lost all its recent gains, which were brought about by unexpected cuts from OPEC and allies.
Dollar/loonie is currently moving near its opening level after the aggressive buying interest yesterday, taking the price towards the 1.3640 resistance level. A disappointing figure may drive loonie even higher towards the downtrend line at 1.3760.
Otherwise, if the Canadian employment report beats expectations on Thursday, it may move the pair through the 50- and the 20-day simple moving averages (SMAs) at 1.3600 and 1.3500 respectively.
Given that Canada exports a significant amount of oil across the world, the trend of the commodity is often crucial in determining the course of various currencies in different regions. As a result, the Canadian dollar fell due to fundamental factors such as dwindling expectations of future.
The Canadian employment report for the month of April is scheduled to be released at 12:30 GMT; however, it is possible that the report will not receive much attention as the Bank of Canada’s decision in April kept the target for its overnight rate steady at 4.5%. On Tuesday, the Canadian Dollar was one of the major currencies that performed the poorest relative to its peers.
Canada’s unemployment rate expected to rise
In March of 2023, the unemployment rate in Canada remained at 5% for the fourth month in a row, which is close to the record low of 4.9% that was seen in June and July 2022. This result is in contrast to the market projection, which was for a rate of 5.1%. Thursday’s employment report could provide fresh evidence for any hints for next policy decision. The employment change is expected to mark a soft increase of 20.0K versus 34.7K before, lifting the unemployment rate slightly higher to 5.1%.
BoC held rates steady
As expected, the Bank of Canada kept its goal for the overnight rate at 4.5% at its April 2023 meeting, and it reaffirmed its commitment to closely monitoring economic data ahead of any future policy rate decisions. In March, the annual inflation rate in Canada dropped to 4.3%, the lowest level since August of 2021. This reduction was in line with market expectations and came after the rate had increased to 5.2% in the previous month. The strong base-year effects for energy costs contributed to the decline. Following a brief pause in its tightening of monetary policy, the Bank of Canada (BoC) projected that inflation would return to 3% by the end of the third quarter. The result was roughly consistent with those projections.
Technical outlook: Loonie and oil
Over the past 24 hours, the Canadian dollar has been one of the worst performing major currencies. The decline in the value of the loonie came the day after WTI crude oil prices fell by almost 5.6%. Oil has lost all its recent gains, which were brought about by unexpected cuts from OPEC and allies.
Dollar/loonie is currently moving near its opening level after the aggressive buying interest yesterday, taking the price towards the 1.3640 resistance level. A disappointing figure may drive loonie even higher towards the downtrend line at 1.3760.
Otherwise, if the Canadian employment report beats expectations on Thursday, it may move the pair through the 50- and the 20-day simple moving averages (SMAs) at 1.3600 and 1.3500 respectively.
Given that Canada exports a significant amount of oil across the world, the trend of the commodity is often crucial in determining the course of various currencies in different regions. As a result, the Canadian dollar fell due to fundamental factors such as dwindling expectations of future.
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