“September employment and international trade for August were a mixed bag for markets, with the details of both reports taking some shine off an upside surprise,” TD Securities analysts note.
Key quotes
“For the LFS this included part-time job growth of 80k and slowing wage growth, while the trade balance swung to a surplus on weaker exports and imports. However, we continue to track Q3 GDP growth at 2.3%.”
“There is not a clear signal for the major currencies in the wake of the dual payrolls. Given lofty market expectations in light of the upbeat US data this week, a modest pullback in the USD seems warranted. That should benefit most of the majors, though the local report doesn’t offer much clarity for the loonie. For one thing, the quality of the headline “beat” could hold it back, owing to the pickup in part-time employment and the miss on the wages.”
“At the very least, it probably does little to move the needle on the BoC and spreads still imply a move back to 1.30. We showed yesterday that the delta of rate moves was crucial for the recent rally, raising the question of how much good news is reflected in CAD. We still think AUDCAD looks attractive at these levels and offers attractive risk/reward for a multi-month move towards 0.96. Otherwise, we look for USDCAD to hold the 1.28 to 1.32 range, leaving us fading the extremes rather than extrapolating the last move.”
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