7 Feb 2014
Flash: USD/CAD: loss of 1.1040/45 would open 1.0900 - TD Securities
FXStreet (Córdoba) - The TD Securities analyst team commented that today's Canadian jobs data might give the CAD a temporary boost, if positive.
Key Quotes
"The CAD sold off on the weak trade data yesterday but recovered on the better than expected Ivey PMI—which would serve as ample warning on how to approach this morning's Canadian employment report, if it wasn't for the fact that most of the market will be watching—and reacting to—the US NFP release as well".
"TD is above the market consensus of a 20k bounce back in Canadian jobs last month after the surprisingly sharp decline in December (-49.5k). But even our call for a 25k gain in jobs would leave the trend rate of employment growth tracking broadly lower. A result in line with TD’s 25k forecast would put the 6-monh average rate of job growth at a little under 15k—that is just a little better than half the rate prevailing at this time last year. The three month average rate of job creation would be almost flat".
"Better jobs data might give the CAD a temporary boost; we still think near-term risks are geared towards USDCAD giving back a bit more of the recent rally and the loss of support around 1.1040/45 that has held the market up so far this week should help tip the market back to a 1.09 handle at least (possibly lower)".
"But with the trend in job creation weak and poor trade data yesterday reinforcing the sluggish growth outlook for Canada, the BoC's concerns about excess supply in the economy will hardly be soothed. That should mean any bounce in the CAD near-term will give way to renewed weakness in the months ahead".
Key Quotes
"The CAD sold off on the weak trade data yesterday but recovered on the better than expected Ivey PMI—which would serve as ample warning on how to approach this morning's Canadian employment report, if it wasn't for the fact that most of the market will be watching—and reacting to—the US NFP release as well".
"TD is above the market consensus of a 20k bounce back in Canadian jobs last month after the surprisingly sharp decline in December (-49.5k). But even our call for a 25k gain in jobs would leave the trend rate of employment growth tracking broadly lower. A result in line with TD’s 25k forecast would put the 6-monh average rate of job growth at a little under 15k—that is just a little better than half the rate prevailing at this time last year. The three month average rate of job creation would be almost flat".
"Better jobs data might give the CAD a temporary boost; we still think near-term risks are geared towards USDCAD giving back a bit more of the recent rally and the loss of support around 1.1040/45 that has held the market up so far this week should help tip the market back to a 1.09 handle at least (possibly lower)".
"But with the trend in job creation weak and poor trade data yesterday reinforcing the sluggish growth outlook for Canada, the BoC's concerns about excess supply in the economy will hardly be soothed. That should mean any bounce in the CAD near-term will give way to renewed weakness in the months ahead".