The Canadian labour market continues to make solid progress in its recovery with another 55K jobs created during the month of December. The data had little impact on the CAD but there is enough here to adopt a bias that the upcoming Bank of Canada meeting is live. As such, economists at TD Securities think risk/reward has moved in favour of the loonie.
Canadian labour market enters 2022 on strong footing
“The Canadian economy added 55K jobs during the month of December, above the market consensus for 25K (TD: 30K), pulling the unemployment rate down to 5.9%. Details were somewhat mixed, with full-time employment up 123K, while hours worked rose just 0.3% and wage growth slipped to 2.7% YoY.”
“Today’s report should place some added pressure on the BoC ahead of the January meeting, where markets are currently pricing a roughly 50% chance of a rate hike, although we continue to look for lift-off in April.”
“We hold a bearish USD/CAD bias but we think that the USD leg could be a bit resilient given a very hawkish Fed and deeply entrenched USD positioning.”