Closed sign on entrance to pub during time of Coronavirus Covid-19 pandemic. Image source: Suzanne Goodwin © 123RF.com
The economic crisis in the US and Canada, caused by the spread of the novel coronavirus, started exerting a heavy toll on the overall economic activity in the two countries in Mid-March after the two respective governments announced national lockdowns.
Since then, millions of people have filed for unemployment claims in both the US and Canada. The two labour markets have felt the brunt of the COVID-19 fallout due to ripples in the financial systems, as an indirect consequence of the policies of social distancing.
Since these policies were put in effect, the unemployment rate in Canada has risen by 2.2 per cent to 7.8 per cent in March. This massive upsurge reflects the jump in the number of unemployed people in the wake of the coronavirus crisis, with many more expected to have lost their jobs in April.
Canada Unemployment Rate. Image source: TradingEconomics.com
In the US, the unemployment rate has increased by 0.9 per cent to 4.4 per cent in the last month. This number, too, is anticipated to have risen exponentially in April, judging by the over 18 million unemployment claims that have been filed over the same period.
US Unemployment Rate. Image source: TradingEconomics.com
The consensus forecasts project the overall unemployment rate in Canada to have jumped to 20.0 per cent in April. Concerning the US, the rate is anticipated to have jumped to 16.0 per cent.
The forecasts for substantial deteriorations in the two labour markets are likely going to reflect on the brunt of the economic hit, as the healthcare crisis continues to unfold and individuals are still forced to stay at home.
The 'Bureau of Labor Statistics' in the US is scheduled to release the NFP report for April this Friday at 2.30 pm CET. At the same time, 'Statistics Canada' is going to release its own jobs report.
Thereby, the labour data in the two countries are expected to demonstrate the real extent of the coronavirus crisis on the two labour markets, taking into account all of the preliminary data that has been released until now.
The market has already started to price in the likelihood of marked deteriorations in the two countries' employment rates, but even still, Friday's reports are likely to prompt massive volatility on the USDCAD.
The pair is currently consolidating in a tight range between the 23.6 per cent Fibonacci retracement level at 1.42646, which is currently serving as a prominent resistance, and the 38.2 per cent Fibonacci retracement level at 1.40161, which is serving as a prominent support.
The likely upsurge of adverse volatility this Friday is expected to propel the price action outside the boundaries of this consolidation range.
USDCAD 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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