Investors eye NFP, Canadian job data

Solid US job numbers expected

With the Omicron Covid variant and the Jerome Powell grabbing this week’s headlines, US nonfarm payrolls has become an afterthought for the markets. I cannot recall a week when anticipation ahead of NFP was so subdued and the release received such scant coverage. Still, let’s not forget that NFP is perhaps the most important economic release on the calendar, and it should be treated as a market-mover for the US dollar.

The US economy is projected to have created 543 thousand jobs in November, after a reading of 531 thousand in October. Besides NFP, the markets expect an improvement in wage growth and the unemployment rate. Wages are forecast to rise from 4.9% to 5.0%, while unemployment is projected to dip to 4.5%, down from 4.6%. If nonfarm employment rolls come in at 500k+ and wages and unemployment are within expectations, the US dollar should hold its own and perhaps move higher.

North of the border, Canada is expected to add 35 thousand jobs in November, similar to the 31 thousand in October. This would be a modest gain, and unless the consensus is way off the mark, any movement in the Canadian dollar will likely be a result of the US job data.

USD/CAD has been in a strong bullish trend, and earlier this week hit 1.2837, its highest level since late September.  The Canadian dollar had a disastrous month in November. USD/CAD rose 3.22%, making it the worst month for the Canadian dollar since March 2020, when Covid-19 first appeared and sent the Canadian dollar tumbling.

Fed Chair Jerome Powell surprised the markets with a hawkish performance on the Hill, raising expectations that the Fed will speed up the unwinding of its bond purchase program. This means that a rate hike could come earlier than previously expected, which is bullish for USD/CAD.

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 USD/CAD Technical

  • There is support at 1.2681. Below, there is support at 1.2569
  • USD/CAD continues to put pressure on resistance at 1.2852, a line which has held since September. This is followed by resistance 1.2911

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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