With the unemployment rate worsening, should we be wary of further downside potential for the Canadian dollar?

With the unemployment rate worsening, should we be wary of further downside potential for the Canadian dollar?

06.11.2023

Last weekend, the Canadian dollar fell against the yen following the release of Canada’s October employment report on the 3rd, which showed the unemployment rate had worsened by 0.2 percentage points from the previous month’s 5.5% to 5.7%. The CAD/JPY pair fell from 109.524 to 109.004.The price fell to the 75-period moving average on the hourly chart. However, during today’s Asian session, the Canadian dollar has been strengthening against the yen, breaking above last weekend’s high to rise to 109.649, so we should remain cautious regarding price movements during the U.S. session.

Despite the eurozone unemployment rate worsening from 6.4% to 6.5% in last weekend’s September employment statistics, the euro rose against the yen. The EUR/JPY pair climbed from 159.592 to 160.403.It has continued to hit new highs during today’s Asian trading session, rising to 160.636. We will need to keep an eye on currency strength during European trading hours to see if the euro’s momentum continues.

Today’s schedule includes German manufacturing new orders at 4:00 PM, Czech industrial production at 5:00 PM, French services PMI at 5:50 PM, German services PMI at 5:55 PM, Eurozone services PMI at 6:00 PM, Eurozone investor sentiment index and UK services PMI at 6:30 PM,at 9:00 PM, Mexico’s Consumer Confidence Index; at 12:00 AM, Canada’s Ivey Purchasing Managers’ Index; at 1:00 AM, remarks by U.S. Federal Reserve Governor Cook; and at 1:30 AM, a U.S. 6-month Treasury bill auction. We must remain highly vigilant regarding the downside potential for the Canadian dollar, as the unemployment rate has worsened from 5.5% to 5.7%.