Canada: Mixed picture from trade and employment data - TDS

Analysts at TD Securities note that Canada’s job growth surprised to the upside in June at 32k though a softer pace of wage growth and higher unemployment rate took some shine off the headline print, while the international trade deficit was wider than expected in May at -$2.8bn on stronger imports.

Key Quotes

“Overall, we view this data as mixed for policymakers. BoC officials are more focused on wage growth than headline unemployment and solid imports will provide a tailwind to investment.”

“Furthermore, we continue to track Q2 GDP at 2.4% which leaves a low bar for the BoC to hike next week.”

“We now think it is an opportune time to begin scaling into short CAD exposure. Holding 1.3100/50 in USDCAD suggests that the bottom may be in.”