The Canadian dollar trading range has exceed a full cent in four of the past five days and the streak of volatility could continue on Friday with the September employment report due at 8:30 am ET (1230 GMT).
The Canadian jobs report is often released alongside non-farm payrolls and is overshadowed but because of the way the October calendar falls, it gets the spotlight on Friday.
The consensus estimate is 20K new jobs after 11K were lost in August. The unemployment rate is expected to remain steady at 7.0%. As always, the breakdown of full and part-time jobs is a key factor in the market reaction.
Canadian jobs report chart Oct 10 2014
The pattern of alternating good and bad months will be familiar to Australian dollar traders after the embarrassing episode that unfolded there over the past two days.
The Canadian dollar is trading close to the midpoint of the weekly range and the report won’t force the complacent Bank of Canada into action but don’t rule out a large move. The market is extremely touchy at the moment. Earlier this week, the low-tier Canadian Ivey PMI sparked a half-cent move in USD/CAD.
The range of estimates is +10K to +35 with 21 economists in the Bloomberg survey. But this report is unpredictable and September is a difficult month to adjust for seasonally and the teachers strike in British Columbia could have made it even tougher.
With oil prices falling and stocks beginning to crack, I see the risks to the downside for the Canadian dollar (upside for USD/CAD). Any misses of 10K from the consensus will spark a move but the magnitude will be significantly larger on a soft report.
