The Canadian economy added back 952K jobs in June, beating expectations, while the unemployment rate was in line with market consensus at 12.3%. The USD/CAD muted response is no surprise as risk sentiment remains the ultimate arbiter of currency dynamics and, therefore, economists at TD Securities expect the loonie to broadly respect the 1.35-1.3630 range.
Key quotes
“The Canadian labour market outperformed expectations with 952k jobs created during the month of June (market: 700K, TD: 600K), split roughly evenly between full (+488K) and part-time workers (+465K).”
“The unemployment rate was slightly higher than expected at 12.3% in June (market: 12.1%, TD: 12.2%), down from 13.7%, but this reflected a sharp increase in participation, which has recovered to 63.8% from <60% in April.”
“USD/CAD. This is not a surprise, as risk remains the ultimate arbiter of currency dynamics at this time. On this front, we do look poised for risk to end the week on a mediocre note, which could keep USD/CAD biased to trade near daily downtrend resistance around 1.3620/30.”
“Biased for the loonie to remain sandwiched between 200-dma support at 1.35 and daily downtrend resistance around 1.3630. A break of the latter would expose 1.3730 June pivot but that would require a really sour turn in risk.”
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