The Canadian dollar is likely to face increased selling pressures over the next 24 hours of trading as economists forecast employment to drop another 50.0K in March, while the jobless rate is anticipated to reach an eight-year high of 8.0%, and fears of a deepening recession are likely to weigh on the exchange rate as growth prospects deteriorate at a record pace.
Trading the News: Canada Net Change in Employment
Time of release: 04/09/2009 11:00 GMT, 07:00 EST
Primary Pair Impact : USDCAD
Expected: -50.0K
Previous: -82.6K
February 2009 Canada Unemployment Rate
| The Canadian labor market lost another 82.6K jobs in February following the record-drop in the previous month, which pushed the annual rate of unemployment to a six-year high of 7.7% from 7.2% in January, and the data continues to reinforce a dour outlook for the world’s eighth largest economy as growth prospects deteriorate at a record pace. A deeper look at the report showed that full-time positions fell 110.9K during the month, while part-time jobs increased 28.3K from January, and conditions are likely to get worse throughout the first half of the year as the economy faces a deepening downturn. Meanwhile, the Bank of Canada took unprecedented steps to steer the nation out of a recession by lowering the benchmark interest rate to a record-low of 0.50%, and may take further steps to stimulate the ailing economy as growth and inflation falter. | |
January 2009 Canada Unemployment Rate
| Canada shed 129.0K jobs in January, which marked the largest drop in employment since comparable records began in 1976, and pushed the jobless rate to a four-year high of 7.2% from 6.6% in December, and conditions are likely to get worse as the region faces its first recession since 1992. The breakdown of the report showed that full-time positions fell another 113.9K after posting a 70.7K drop in December month, while part-time jobs slipped 15.1K from the previous month. The data continues to reinforce a dour outlook for growth and inflation, and undermines the BoC’s encouraging forecast for a pronounced recovery in 2010, which could lead policy makers to adopt a zero interest rate policy over the near-term in order to avoid a deepening recession. As a result, the BoC is likely to lower the key rate to 1.00% next month, which would be the lowest level since the central bank was established in 1934. | |
What To Look For Before The Release
Traders with access to market depth information via the FXCM Active Trader Platform may use it to gauge the potency of the economic data release as well as to shed some light on the market’s directional bias. Increasing volume ahead of the announcement will telegraph likely follow-through behind whatever move is to materialize, while an imbalance in available liquidity on the Bid versus the Offer side of the market will tell us the direction major institutions are likely favoring ahead of the announcement:
| Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the CAD against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on USDCAD ahead of the data release. | Bearish Scenario: |
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