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Following June’s job growth of 953,000, the pace of hiring in Canada is set to slow in July, TD Securities analysts think and forecast job growth of 350,000.

Key quotes

“A headline print that is slightly below consensus (or slightly above consensus for that matter) should not do much to change the narrative around the recovery. Our forecast implies that Canada will have recovered slightly more than half the jobs lost in March and April, and markets seem to understand that it will take quite a bit longer to recoup the remaining 1.5 million in job losses from the recession.”

“The Canadian numbers will need to be taken in context of the US report given the importance of the broad USD direction TD’s forecasts are a bit spicier there, where it’s likely a weak number travels through both the USD and risk sentiment. In other words, a lousy number dents risk appetite, in turn benefiting the oversold USD.”

“Our broad USD positioning indicators now show shorts back to mid-2018 levels. Against the G9 itself, our USD positioning signal runs at 12m lows while our Greed index (high beta G10 and EMFX) sits at 12m highs. The result would likely weigh on the loonie, given the links to risk sentiment and broader USD dynamics, especially if the Canadian numbers miss expectations. The positioning indicator shows that CAD longs look less stretched the rest where European currencies look the most at risk in the short-run. On a risk pullback, CAD could outperform on the crosses, where we like it higher against NZD and AUD.”