Canadian Dollar: Jobs weakness caps gains against US Dollar - TD Securities
TD Securities strategists note that Canada’s softer August labour report, including weaker employment momentum and slower wage growth, is unlikely to materially change the Bank of Canada’s (BoC) assessment of the labour market.
TD Securities analysts suggest that Canada's disappointing August employment data, marked by weaker job growth and slower wage gains, will likely not significantly impact the Bank of Canada's assessment of the national labour market. Despite this, the contrasting performance of US job figures has put downward pressure on the Canadian Dollar (CAD).
They anticipate USD/CAD to stay around 1.39 in the short term, with CAD trailing other currencies as its relative allure wanes. Even though the report did not alter the Bank of Canada's view on Canadian labour, it showed a 6-month trend of 23,000, up from 16,000 in July, remaining well above the 13,500 average. However, the slowing employment/labour supply ratio and deceleration in wage growth could alleviate some of the Bank's worries about inflation.
The unexpected strength in US payrolls and subdued Canadian numbers outweighed the BoC's hawkish posture. Consequently, USD/CAD is expected to remain around 1.39 in the near term, with CAD underperforming its peers as carry trades continue to dominate.
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