CAD: Weak labour market delivers arguments for further interest rate cuts – Commerzbank
|Almost every currency strengthened against the US dollar on Friday in response to the weak US labour market report, Commerzbank's FX analyst Michael Pfister notes.
CAD is likely to continue to face difficult times
"The sad exception among the major currencies was, once again, the Canadian dollar, which depreciated slightly against the US dollar. By comparison, the euro gained by more than half a percent, while the Swiss franc gained by almost one percent."
"The reason for this is clear: the Canadian labour market performed even more weakly than its US counterpart. In August, nearly 65,000 jobs were lost in Canada, following 40,000 in July. This more than offset the positive outlier in June, and on average, Canada has lost almost 6,000 jobs per month over the last six months (i.e. since tensions with the US began to escalate)."
"As we have argued on several occasions, no other country is likely affected by the new US trade policy as much as Canada. In June and July, the Bank of Canada held back in view of the uncertain impact of tariffs on inflation. However, now that the labour market has delivered two negative surprises, the next interest rate cut is likely to come next week. The Canadian dollar is likely to continue to face difficult times."
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