Canadian employment is back to pre-COVID levels, CAD to see further perform – TDS
|Canadian employment is back to pre-covid levels in September. The loonie caught a bid following the employment beat. Economists at TD Securities are biased to further CAD outperformance with elevated energy prices and a key Bank of Canada (BoC) meeting later next week.
CAD to see gains on the crosses, like EUR/CAD
“The Canadian economy added another 157.1K jobs in September, well above the market consensus for job growth to slow to 60K after the 90-95K prints in July-August. Details were broadly upbeat, with full-time employment up 194k (PT down 36.5k) and a 0.4pp increase to labour force participation that brought the participation rate back to pre-pandemic levels. Total employment is also back to its pre-COVID level, although the employment rate remains ~1pp below levels from February 2020.”
“Today's jobs print makes it easier for the BoC to continue signaling rate hikes in the second half of next year — we don't see an argument for shifting the forward guidance to 2022H1 on the back of this jobs print.”
“With energy prices likely to remain elevated and a key BOC meeting later this month, we think the CAD can continue to perform. We hold a stronger conviction on the crosses than against the USD however, as we expect the USD to trade rather sticky in the coming weeks (with the Fed still likely to taper next month). Here, we especially like EUR/CAD downside following this week's technical break.”
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