Canadian Dollar: Labor data may trigger dovish repricing – BBH

Brown Brothers Harriman highlights that USD/CAD is consolidating just above 1.4200 after touching fresh cyclical highs near 1.4300. Canada’s September labor force survey is the key release, with modest job gains and a higher unemployment rate expected. The bank argues that nearly 100 bps of Bank of Canada rate hikes priced over the next year looks too aggressive, leaving the Canadian Dollar vulnerable to dovish repricing.

CAD vulnerable to dovish repricing of BoC expectations

"USD/CAD is consolidating just above 1.4200, after reaching fresh cyclical highs near 1.4300 earlier this week. Canada’s September labor force survey is today’s highlight (1:30pm London, 8:30am New York)."

"The economy is expected to add +10.0k jobs after losing -41.7k jobs in August. The unemployment rate is seen rising 0.1ppt to 6.5% on an unchanged participation rate of 65.0%, pointing to weak labor demand."

"Nearly 100bps of BOC rate hikes priced over the next twelve months looks too aggressive and leaves CAD vulnerable to a dovish repricing. Canada core inflation is near the banks’ 2% target and indicators point to continued excess supply in the economy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)