USD/CAD: Dips following Canadian employment data to be shallow and short-lived – TDS
05.11.2021, 14:02

USD/CAD: Dips following Canadian employment data to be shallow and short-lived – TDS

The Canadian economy added 31K jobs in October, slightly below the market consensus for a 42K print. USD/CAD's reaction was to respect 1.2480/00 resistance and economists at TD Securities think the modest lift to the CaD is temporary as a lot of good news is in the price.

Canadian employment shifts into a lower gear in October

“The Canadian labour market shifted into a lower gear in October with just 31K jobs added during the month, below the market consensus for 42K, and a fraction of the 157K print for September. However, details were more favourable; job growth was driven by full-time employees (+36k) with an offsetting decline in part-time employment. The LFS also revealed a slight decline in the participation rate, which saw unemployment fall by 0.2pp to 6.7% (market: 6.8%).”

“Hours worked rose by 1.0% in October which bodes well for industry-level GDP, while wage growth firmed to 2.1% YoY.”

“Unless we see a material surge higher in oil prices, we think dips in USD/CAD will be fairly shallow and short-lived.”

“With some G3 central banks offering more explicit pushback on market pricing for hikes, we think this will reverberate in regions where hawkish pricing looks a bit too aggressive. Taken in conjunction with the CAD being one of the most overbought currencies on our positioning measures, we are comfortable with holding onto our USD/CAD long.

 

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