Giles Coghlan LLB, Lth, MA
Financial Source
On Friday we have CAD jobs data and the US NFP data. Both reports are worth catching and here is the outlook and what to look out for.
Canadian jobs
Canadian jobs data has been showing signs of weakness recently. The last three reports have shown contractionary prints and another drop in jobs this month will likely get the Bank of Canada’s attention. The BoC is on a hawkish path, but if we get the fourth miss in jobs here that could be enough to weaken the CAD on expectations that the BoC may turn more negative on rates.
CAD
The obvious pair would be GBPCAD long if the GBP is still seeing some strength on Friday. Otherwise, expect CAD weakness and choose a pair on the day. If the US jobs data comes in strong then USDCAD upside would be ideal. So, onto the NFP below.
US Jobs
The US labour market has been strong, but a big miss here sub 150K would raise expectations that the Fed could be less aggressive on hiking rates.
USD
If the headline comes in anywhere below 180K then the USD should weaken. This would likely send the S&P500 higher and silver higher too alongside gold.
So, there we have it. Two trading opportunities to look forward to on Friday. Short Term Interest Rate markets are currently pricing in an 82% of chance of a 50bps rate for the BoC and a terminal rate just over 4% from the current level of 3.25%. The Federal Reserve has a pricing of 63% chance of a 75bps hike and a terminal rate of 4.80% from a current rate of 3.125%. If the deviations occur as outlined above on Friday then look for repricing in the markets outlined for at least short-term, intraday trading opportunities.
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