On the first Friday of the month, the US Non-farm payrolls tend to get all the focus, and few traders focus on the Canadian labour market report that is usually released on the same day, and at the same time.

The reason why I prefer the Canadian labor market figures is because traders tend to act more rational on the figure release by selling the Canadian dollar on a bad report and buy it on a good outcome. The US NFP, on the other hand, tends to trade irrationally with big swings to the upside and the downside in the first hours of the report, making it easy to lose money.

The next Canadian labor market report will, however, not publish this Friday. Instead, it is due to be published on Thursday, April 9, at 13:30, as Friday is a bank holiday in Canada.

Market Expectations

The current estimates are for the Canadian unemployment to remain unchanged at 5.6%. The unemployment rate has been around the same level since September, and I think it is unlikely that the figure will remain around the same level because of the Coronavirus crisis. On the coronavirus front, the spread of cases in Canada increased by about 20.5% per day from March 21 to March 31 for a total of 8161 cases on March 31.  The growth rate is similar to what we have seen in the rest of the world.

No critical data covering the recent coronavirus spread period has been published, except for the Canada Markit Manufacturing PMI that dropped to 46 from 51.8 prior, and lower than the 53.3 anticipated. The PMI is a leading economic indicator, and it suggests that the Canadian economy has slowed down sharply.

We also know that the Canadian central bank reduced interest rates from 1.75% in January to 0.25% on March 27, so the Canadian unemployment rate is bound to rise. Also, the Canadian dollar has been under massive pressure due to the ever-declining crude oil prices, and when writing this on April 1, crude oil prices were trading at $20.28 and bearish below the $22.05 level.

If the expectations are for an unchanged unemployment rate remain as we head into Thursday next week, then I think it is likely that we will see a massive move on the Canadian dollar.

Analysis was written by Alejandro Zambrano, ATFX Global Chief Market Strategist.

Legal: ATFX is a trading name of AT Global Markets Limited (ATGM, registration number 24226 IBC 2017). ATGM is an International Business Company in Saint Vincent and the Grenadines. Registered address is : The Financial Services Centre, Stoney Ground, Kingstown, St.Vincent & the Grenadines.