Canadian employment preview - TD Securities


"TD looks for job growth to pick up to a 25k pace in November led by further gains in the services sector," TD Securities analysts said in a recently published report previewing the Canadian employment data.

Key quotes

"Employment in goods-producing industries will see a drag from oil and gas, where the blowout in WCS spreads has led firms to shut-in production, although this should be offset by hiring in manufacturing after the employment component of Markit PMI rose to a survey record. Job growth of 25k will allow the unemployment rate to edge lower to 5.7% which will register as a multi-decade low. Wage growth, however, will paint a more downbeat picture, with average hourly earnings forecast to slip to 1.8% y/y on a strong base effect from last November."

"Barring a statistically significant surprise, we do not think that the CAD will show much deference to a job gain of 25k following the BoC's dovish pivot that triggered a material repricing of the OIS curve. In this regard, the market may succumb to confirmation bias; disappointing data would add insult to injury to the CAD, whereas it will take a series of good news (and data outside of noisy jobs) to reverse the tide. Further slippage in the wage data will not do the CAD any favors either, though our expectation fits in line with the consensus view."

"Moreover, we expect US payrolls to positively surprise consensus, which could easily exacerbate the topside breakout in USDCAD through 1.34. In terms of signposts, 1.3380 should offer good support for USDCAD with 1.35 the next major topside attractor (HFFV sits ~1.3450). We have a preference to express CAD weakness on the crosses however, with a strong bias against the JPY. "

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