Canadian Jobs Preview: Any upside surprise to move the loonie higher

Canada labor market figures have smashed expectations in both February and March – with the latter coming out at 303,100, more than triple the expectations. But a resurgence of COVID-19 in the northern nation may have hurt hiring. Will there be another – perhaps last – move to the downside? Canada is set to report a substantial loss of jobs in April, but there are reasons to expect the outcome would be better. That would help the loonie, FXStreet’s Analyst Yohay Elam reports. 

Reasons to expect a better outcome

“The nation's labor market figures have been volatile, and that is one expectation to why economists expect a loss of 175,000 positions in May.”

“Canada is vaccinating its population, like its peers. Better prospects of the near future boost business confidence and could already be triggering more hiring than economists expect.” 

“Perhaps the most important reason to expect a better Canadian jobs report comes from the south. The US economy is booming thanks to immunization and massive fiscal stimulus. The economic calendar is pointing to a surge of nearly one million jobs in America. Therefore, as 75% of Canadian exports go south there is a good reason to think that the rapid US expansion would also cause hiring in Canada.” 

“Moreover, oil prices gradually increased in April, potentially causing the industry to bring more people on board.” 

“The forecasts seem too gloomy, and any upside surprise could move the loonie higher. It would join the Bank of Canada's announcement of tapering bond buys, a surprising move that already sent the C$ higher. In case, the gloomy predictions are correct, there is room to the downside for CAD, albeit limited.”