Will the loonie continue the rise after the jobs report? – Forex News Preview
April 4, 2023 1:28 pm
The Canadian employment report for March will be released on Thursday at 12:30 GMT, but it may not get as much attention as the Bank of Canada’s interest rate decision on April 12. The Canadian dollar is losing ground after several days of gains versus the US dollar, underpinned by a surprise production cut of more than 1 million barrels per day from OPEC+ announced on Monday.
Canada’s unemployment rate expected to rise
The jobs data will still be monitored by policymakers, since Canada’s labor market could potentially haunt those who wager that the inflation problem has been resolved. Last month’s employment report, provided fresh evidence of a labor market that is stubbornly tight, contradicting the expectations of the Bank of Canada, that recent lackluster economic growth would put pressure on the job market. In February, the unemployment rate in Canada remained unchanged at 5%, which is still very near the all-time low of 4.9% that was seen in June and July 2022.
Thursday’s employment report could provide fresh evidence. The employment change is expected to mark a soft increase of 14K versus 21.8K before, lifting the unemployment rate slightly higher to 5.1%.
Will BoC hold rates steady?
In the previous policy meeting, the Bank of Canada maintained its target for the overnight rate at 4.5% and said it expected to maintain it at that level if economic circumstances evolved in line with forecasts. The move came after the Bank of Canada (BoC) raised interest rates by 25 basis points (bps) in January and was the first pause in the tightening drive for major monetary authorities.
Fourth quarter 2022 GDP growth in Canada was flat, falling short of official forecasts. However, falling energy costs lend credence to falling consumer prices, making a halt in the bank’s tightening cycle more warranted. Since reaching its peak of 8.1% in June, inflation has fallen to January’s level of 5.9%, and the Bank still anticipates a drop to the 3% range by midyear. In April’s meeting, the rate is expected to remain unchanged again.
OPEC cuts production
In other news, the sudden cut in production by OPEC and its allies was aimed directly at people who were betting that oil prices would go down. Oil futures went up as much as 8%, which surprised investors and made them reevaluate all of their assets, from stocks to bonds. Yet, consumers and the global economy were caught in the crossfire as OPEC+ raised inflationary fears and bets on future interest rate hikes.
Technical outlook: USD/CAD
As regards the loonie, if the Canadian employment report beats expectations on Thursday, it may move the dollar/loonie through the medium-term uptrend line down to the 200-day simple moving averages (SMA) near $1.3385 ahead of the $1.3225-$1.3260 support region.
The pair could also bounce off the rising trend line and make up for yesterday’s losses after the news about OPEC. This could happen around $1.3500. The 50-day SMA at $1.3560 will also be in focus before the spotlight shifts to the $1.3640 resistance.
Elsewhere, the price of WTI crude oil continues to rise after the strong bullish gap, testing $81/per barrel.
The Canadian employment report for March will be released on Thursday at 12:30 GMT, but it may not get as much attention as the Bank of Canada’s interest rate decision on April 12. The Canadian dollar is losing ground after several days of gains versus the US dollar, underpinned by a surprise production cut of more than 1 million barrels per day from OPEC+ announced on Monday.
Canada’s unemployment rate expected to rise
The jobs data will still be monitored by policymakers, since Canada’s labor market could potentially haunt those who wager that the inflation problem has been resolved. Last month’s employment report, provided fresh evidence of a labor market that is stubbornly tight, contradicting the expectations of the Bank of Canada, that recent lackluster economic growth would put pressure on the job market. In February, the unemployment rate in Canada remained unchanged at 5%, which is still very near the all-time low of 4.9% that was seen in June and July 2022.
Thursday’s employment report could provide fresh evidence. The employment change is expected to mark a soft increase of 14K versus 21.8K before, lifting the unemployment rate slightly higher to 5.1%.
Will BoC hold rates steady?
In the previous policy meeting, the Bank of Canada maintained its target for the overnight rate at 4.5% and said it expected to maintain it at that level if economic circumstances evolved in line with forecasts. The move came after the Bank of Canada (BoC) raised interest rates by 25 basis points (bps) in January and was the first pause in the tightening drive for major monetary authorities.
Fourth quarter 2022 GDP growth in Canada was flat, falling short of official forecasts. However, falling energy costs lend credence to falling consumer prices, making a halt in the bank’s tightening cycle more warranted. Since reaching its peak of 8.1% in June, inflation has fallen to January’s level of 5.9%, and the Bank still anticipates a drop to the 3% range by midyear. In April’s meeting, the rate is expected to remain unchanged again.
OPEC cuts production
In other news, the sudden cut in production by OPEC and its allies was aimed directly at people who were betting that oil prices would go down. Oil futures went up as much as 8%, which surprised investors and made them reevaluate all of their assets, from stocks to bonds. Yet, consumers and the global economy were caught in the crossfire as OPEC+ raised inflationary fears and bets on future interest rate hikes.
Technical outlook: USD/CAD
As regards the loonie, if the Canadian employment report beats expectations on Thursday, it may move the dollar/loonie through the medium-term uptrend line down to the 200-day simple moving averages (SMA) near $1.3385 ahead of the $1.3225-$1.3260 support region.
The pair could also bounce off the rising trend line and make up for yesterday’s losses after the news about OPEC. This could happen around $1.3500. The 50-day SMA at $1.3560 will also be in focus before the spotlight shifts to the $1.3640 resistance.
Elsewhere, the price of WTI crude oil continues to rise after the strong bullish gap, testing $81/per barrel.
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