Market attention turns to Canadian jobs data, with the unemployment rate expected to tick up to 7.2%. A weaker-than-expected report could reignite speculation of an earlier rate cut in October, adding pressure on the Loonie. While Canadian Dollar (CAD) has benefited from its correlation with the USD this week, its near-term outlook remains fragile unless ongoing US-Canada negotiations yield more concrete results, ING's FX analyst Francesco Pesole notes.
Unemployment expected to rise to 7.2%, CAD vulnerable
"Elsewhere in North America, keep an eye on jobs data out of Canada today. Expectations are that the unemployment rate continues to inch higher – to 7.2% – and that should endorse another rate cut by year-end."
"While 25bp is fully priced in for the December meeting, October is currently being treated as a 50-50 affair (11bp priced in). Any poor readings today could fuel speculation of an October cut and weigh on CAD."
"The loonie has done well this week thanks to its tighter correlation with the USD, but remains in a fragile spot unless the re-appeasement attempts between Canada and the US seen in the past few days morph into something more concrete soon."
