Will Canada job report boost CAD?

The Canadian dollar has reversed directions on Friday and recorded slight gains. Currently, USD/CAD is trading at 1.2592, up 0.25% on the day. It has been a relatively quiet day week for the pair, but that could change in the North American session, with the release of key employment numbers (12:30 GMT).

Canada expected to post strong job gains

Canada’s economy continues to grapple with the Covid-19 crisis, and the country’s vaccine rollout has been on the sluggish side. At the same time, the economy is slowly finding its footing, and the Bank of Canada expects positive growth in 2021. The labor market surged in February, adding 259.2 thousand jobs. The April estimate stands at 101.5 thousand, and if the reading is within expectations, there is a strong likelihood that the Canadian dollar will respond with gains.

The Canadian dollar has looked sharp of late, gaining 1.38% against the greenback in March. The economic recovery in the US has helped rejuvenate Canada’s export sector, with 75% of Canadian exports going to the US. As well, the improvement in the global economy has raised the risk appetite for minor currencies like the Canadian dollar.

Another key factor that has boosted the currency is the Bank of Canada’s announcement that it plans to taper its purchase of government bonds. The QE programme has been a key tool in keeping interest rates low during the Covid pandemic, and the move to reduce bond purchases would make Canada the first of the G-7 members to take such a step, which could occur as early as the next policy meeting on April 21st. In contrast, the Federal Reserve is not expected to taper QE before 2022.

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USD/CAD Technical

  • CAD has support at 1.2521. Below, there is support at 1.2465
  • There is a pivot point at 1.2584
  • On the upside, 1.2640 was under strong pressure during the week. This is followed by resistance at 1.2703

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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