Canadian Unemployment Rate: 8.2% Prior 8% Expected

Canadian unemployment data is up later today and will be the headline data event of the US session. Given the improvement we’ve seen over the last year, with the rate moving from highs of 13.7% at the height of the crisis to the current lows of 8.2%, there is a lot of focus on today’s data. The market is forecasting a further move lower to 8% with jobs growth of 101.5k. If we see the data printing in this region this is likely to support CAD across the end of the week and into next week, helping stem the declines seen so far across this week.

However, if the data disappoints, this could be the fuel for a further move south in the currency which has been the second worst performer among the majors this week. Currently, the retail market is holding a fairly neutral 54% long 46% short position, so there is plenty of room for a n extension either-way in response to today’s data.

Technical Views

6C (CAD Futures)

CAD futures have been trading higher within a bullish channel since Q3 2020. However, the move has recently started to exhibit signs of topping with bearish divergence growing into the last two peaks. Price has reversed from highs above the .81 level and has now broken below the channel low. For now, price is sitting on support at the .7921 level and will need to see strong data today to maintain upside. A weak print today could see price breaking those lows and heading towards .7843 next and .7760 thereafter.

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