The USD/CAD pair trades at 1.4243 as the US Dollar softens, though TD Securities expects the pair to remain supported above 1.40 due to weak Canadian labor data and shifting Bank of Canada rate-hike expectations.
The pair trades at 1.4243, down from the four-week high of 1.4265 hit earlier in the day as the US Dollar retreats, but it is still on track for a 0.8% weekly rally. Strong US CPI has boosted December Fed rate-hike expectations, while Canada lost 4.7K jobs in October against a 13.6K increase expected, lifting unemployment to 6.7%. TD Securities sees the pair supported above 1.40 on the policy divergence, which limits the downside from the intraday pullback.
The Canadian Dollar posts marginal gains as the US Dollar retreats from a four-week high of 1.4265. Despite the intraday pullback, the pair remains on track for a 0.8% weekly rally, supported by strong US CPI data and diverging labor market trends between the two nations.
The gain is mainly driven by the US Dollar pulling back from recent highs against most peers, not by Canadian strength; the weak October jobs report (4.7K jobs lost, unemployment at 6.7%) still weighs on the CAD.
TD Securities expects the pair to stay supported above 1.40 because Canada's rising unemployment and falling wage growth reduce the chance of a December Bank of Canada rate hike relative to the Fed.