Analysts at TD Securities (TDS) offered a brief preview of the Canadian monthly employment report, due for release on Friday. The data would influence the loonie and provide some meaningful impetus to the USD/CAD pair.
“We look for job growth of 38k in July, driven by a partial rebound for trade services and natural resources after their sharp decline in June. Full-time hiring should lead the increase, while stronger labour force participation should keep unemployment stable at 4.9%. We also expect to see wage growth firm to 6.0% y/y in July, although AHE (Average Hourly Earnings) should slow on a m/m basis.”
“The CAD is most correlated with US equities and broad USD variation, neither of which will be affected by this data release. 1.28/29 range should persist and dips in USDCAD are a fade.”
“Overall direction will depend on the Treasury market, but an upside surprise on jobs supports both wider Canada-US spreads and a flatter curve domestically.”