Canada’s jobs numbers should show a modest slowdown in hiring. However, USD/CAD is set to be moved by external factors, which could lift the pair to the 1.31/32 area, economists at ING report. Consensus is centred around a 22K headline reading today. We think only a markedly weak reading today can force a dovish re-pricing of BoC rate expectations. Markets are fully pricing in a 75 bps rate hike, and marginally speculating on an even larger increase next week. We expect 75 bps and a lingering hawkish statement.
Jobs data unlikely to impact BoC rate expectations
USD/CAD should remain primarily a function of global factors: risk sentiment and commodities above all. Upside risks for the pair persist in the short term, despite the constructive domestic picture, and a move to the 1.31-1.32 area is surely possible.