TD Securities expects USD/CAD to stay supported above 1.40, driven by weak Canadian labor market data that reduces the likelihood of a December Bank of Canada rate hike compared to the Fed.
TD Securities expects the pair to stay supported above 1.40 on diverging jobs data, with rising unemployment and falling wage growth in Canada. This weakens BoC December rate-hike pricing relative to the Fed, favoring USD upside. It is an analyst view, not new data, which limits the surprise factor.
Rising unemployment and falling wage growth in Canada reduce market pricing of a December BoC rate hike relative to the Fed, putting the Canadian Dollar under pressure. The article explicitly frames CAD as the weak currency versus the Dollar near-term.
TD Securities analysts maintain a bullish outlook for USD/CAD, expecting the pair to remain supported at the 1.40 level. The firm points to diverging employment data between the U.S. and Canada, specifically noting that rising unemployment and falling wage growth in Canada are dampening expectations for a Bank of Canada rate hike in December relative to the Federal Reserve.
Canadian employment data is deteriorating, with unemployment rising and wage growth falling, which lowers expectations for a Bank of Canada rate hike in December relative to the Fed. TD Securities sees the pair supported above 1.40 on this divergence.
TD sees USD/CAD supported around and above 1.40 in the near term.
Weak Canadian jobs data — a rising unemployment rate and falling wage growth — have reduced the market's pricing of a Bank of Canada rate hike in December relative to the Federal Reserve, weighing on the Loonie.