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USD/CAD stays near 1.4200 as Canada jobs outlook tempers loonie
Brown Brothers Harriman expects Canada to add only about 10.0k jobs in June, a softer labor print that could cool Bank of Canada hike pricing and keep USD/CAD biased higher.
Brown Brothers Harriman currency strategist Elias Haddad said USD/CAD is trading just below 1.4200 and is broadly tracking US-Canada two-year government bond yield spreads ahead of Canada’s June labor data.
Haddad’s base case calls for a sharp slowdown in hiring, with Canada’s economy expected to add about 10.0k jobs in June versus 87.8k in May, while the unemployment rate is forecast to hold at 6.6% for a second straight month.
The firm links the setup to expectations that markets could pare back Bank of Canada rate hike bets, noting room for pricing to adjust lower from the view that hikes total 50 bps over the next 12 months, which would leave USD/CAD biased higher in coming sessions.
BBH also pointed to softer labor-market indicators, including job vacancies falling to the lowest since October 2017, businesses reporting labor shortages declining further below their historical average, and hiring intentions worsening in Q2.