USD/CAD: Employment data should not provide much momentum for the Loonie – Commerzbank

Elisabeth Andreae, FX Analyst at Commerzbank, analyzes CAD outlook ahead of the Canadian labour market due at 12:30 GMT.

USD/CAD and general market sentiment are likely to depend mainly on the result of NFP

If the Canadian labour market report supports the impression of a soft landing for the economy, as expected, the Canadian data should not provide much momentum for the CAD exchange rates. 

A surprisingly strong labour market report will buoy the Bank of Canada’s rate hike expectations somewhat, thus supporting the Loonie a little.

USD/CAD and general market sentiment are likely to depend mainly on the result of the US equivalent. If it involves major surprises, very weak US data might fuel increasing fears of a recession, thus leading to heightened risk aversion, CAD is going to fare worse than the usually favoured USD. Things will not look much better in case of a surprisingly strong US labour market report if this fuels rate hike expectations on the market.

See:

• Canada Employment Preview: Forecasts from five major banks, further rise in the job count

• NFP Preview: Forecasts from 9 major banks, moderate downward trend in job growth