The net change in employment in Canada was negative by 43k in June, contrary to expectations of an increase of 23k. CIBC analysts point out that other details of the report should keep the Bank of Canada on track for a 75bp rate hike next Wednesday. Still, economists at TD Securities believe the USD / CAD pair is in the process of building a base, and an upward break above the key resistance at 1.3080 is inevitable.
Canada: BoC is likely to raise interest rates by 75 bp despite falling employment – CIBC
There are indications that Canada’s June employment figures were not bad enough to trigger a sigh of relief for those concerned about inflation overheating. The 43,000 job decline was certainly a pause in the hectic job growth since February, but other signs such as rapid year-on-year wage growth, increased hours worked and new low unemployment levels should be enough experts say for the Bank of Canada to step up interest rates by 75 basis points on Wednesday. The Bank of Canada’s concerns about the tight labor market will not be alleviated as the unemployment rate has dropped two ticks to a new cycle low of 4.9%. This reflected a decline in labor force participation as fewer unemployed people were actively looking for a job, the report said. According to strategists, economic growth in Canada in Q2 should remain in the range of 4% and even with a decline in employment, other signals in the latest data are consistent with the need for further monetary policy tightening.
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I WANT TO INVEST WITH INTERACTIVE BROKERS – We are sticking to our appeal to raise interest rates by 75 basis points next Wednesday, and the overnight rate will reach the highest level of 3% this year – underlined.
The dollar (USD / CAD) will break above key resistance at 1.3080 – TDS
The Canadian dollar has held up fairly well amid the strong US non-farm payroll report and the disappointing Canadian employment report. Economists at TD Securities believe the USD / CAD pair is in the process of building a base, and a top break above key resistance 1.3080 is inevitable.
– The disappointing number of jobs is doing CAD no favors, especially compared to the much better US payroll report. The mix of data supports the rise in USD / CAD, but we are not convinced that the rate will break the resistance of 1.3080 in the near future. More dominoes need to fall before that can happen. But it seems inevitable, it was pointed out. – We are long USD / CAD and we are aiming for 1.35 – summarized.
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