The USD/CAD appreciated slightly on a volatile day in the forex market. Most of the action was on the other side of the Atlantic as the failure by the European Central Bank (ECB) to convincingly use all the tools at its disposal resulted in the EUR surging 3 percent versus the USD. The Loonie lost ground versus the USD as the pair again flirted with the 1.34 price level, before settling lower towards the current 1.3350 level. American and Canadian employment data will be released tomorrow at 8:30 am with most of the market to be focused on the non farm payrolls report (NFP).
Canadian employment data is expected to show around 10,000 jobs lost, but no change in the unemployment rate at 7.0 percent. The U.S. NFP report is expected to show the American economy added more than 200,000 new jobs in October. Given the state of the currency market after the ECB reaction, the market will be looking at the U.S. jobs report to bring back the rate divergence expectations and a strong showing form the NFP could boost the USD versus the EUR and the CAD.
The Canadian economy is facing multiple headwinds with the emerging market slowdown which hits commodity prices and the rate divergence trends that keep the currency level until there are indeed higher rates. Tomorrow’s Organization of the Petroleum Exporting Countries (OPEC) meeting could have far reaching implications for the price of oil if there is an agreement by members to curb production to stabilize prices. Saudi Arabia has so far resisted this strategy and in fact is pumping at record levels to keep gaining market share versus competitors. The resulting supply glut has flooded the market and has the price of West Texas oil around $40.
The loonie must fall to give a chance of economic recovery that much is clear, how to accomplish that depreciation is something the Bank of Canada and multiple analysts are pondering as variables keep changing and in the case of the ECB the players are misreading the market with disastrous results. American and Canadian job reports will show the gap between an economy in recovery and one still stuck due to its dependance on the energy sector. Tomorrow could mark a double whammy for the CAD if a strong NFP report combines with the OPEC keeping production rates untouched.
CAD events to watch this week:
Friday, December 4
8:30 am CAD Employment Change
8:30 am CAD Trade Balance
8:30 am USD Non-Farm Employment Change
8:30 am USD Trade Balance
10:00 am OIL OPEC Press Conference
*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar 
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