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This Friday at 12:30 pm GMT, Canada will print its labor market numbers for the month of September.

With no other major catalysts on tap this week, the event just might inspire solid intraday moves for the Loonie.

Planning on trading the event? Here are the points you need to know first:

What happened last time?

  • A net of 246K jobs was added in August after a 419K net gain in July
  • The unemployment rate ticked lower from 10.9% to 10.2%
  • Labor force participation rate rose to 64.6%, still below its pre-COVID level (65.5%)

Canada saw a net job addition of 246K jobs in August, lower than the 262K increase expected, and below the 418K net gain in July.

Meanwhile, the jobless rate ticked lower to 10.2% still above the pre-COVID level of 5.6% in February, and still well above the Great Financial Crisis peak of 8.7% in June 2009.

Overlay CAD pairs: 15-minute Forex Chart
Overlay CAD pairs: 15-minute Forex Chart

Despite a worse-than-expected net jobs gain, we saw the Loonie broadly higher ahead and after the event against most of the majors. This was despite a move lower in oil prices, and likely due to August being the fourth consecutive monthly jobs increase and a generally positive risk environment.

What are traders expecting this time?

  • Net addition of +150K workers is expected for September
  • Unemployment to ease from 10.2% to 9.8%
  • Participation rate could inch up from 61.4% to 61.6%

Analysts see further job gains as improvement in Canada’s manufacturing sector continued according to the IHS Markit Canada Manufacturing PMI survey.  But the pace of growth is likely to be slower as indicated by today’s IVEY PMI survey data, a leading indicator for the official labor market numbers.

It printed above the expansionary 50.0 mark, but below the 67.8 reading in August. What’s more, the employment index also ticked lower to 53.8 vs. 56.1, further supporting the lowered expectations.

Trading tips

At their last monetary policy meeting, the Bank of Canada expected a faster-than-expected rebound for the third quarter, and if this week’s update confirms that outlook, the odds of increased monetary policy support will likely drop, which will likely support the Loonie short-term.

But this may also mean that the recent transition away from the COVID-19 emergency income support program will be more permanent, potentially bringing back economic pain, especially if the rising COVID-19 cases situation sparks speculation of another mass lockdown coming.

Any kind of bounce from a positive employment update may be limited if longer-term traders take on this thesis.

So, there doesn’t seem to be a clear directional bias in either scenario, but once again, as long as we do see a positive job gain, the odds remain more in favor of the bulls as demonstrated with the last release.

Oh, and don’t forget to consider broader economic themes in your trades!

Bearish themes such as concerns over rising coronavirus cases and a continued lack of a new U.S. stimulus package, or bullish catalysts like jumps in high-yielding equities and oil prices can make or break the Loonie’s intraday trends after the report is released.

Pay attention to those storylines as well before considering your long or short bias before/after the event.

Still, deciding which currency to trade against the Loonie? Check out this MarketMilk™ performance ranking of CAD pairs to help you gauge which might be the strongest bullish or bearish rivals:

CAD Performance over last 7 days
CAD Performance over last 7 days

Not feeling confident about trading the event at all? That’s okay, you can always stay in the sidelines and observe the Loonie’s reaction to the release.