USD/CAD: Strong Canadian labour market data to support Loonie – Commerzbank

After Loonie was able to gain noticeably yesterday, the market is likely to look with excitement at the labor market report for April. Economists at Commerzbank analyze how could the CAD react to Canadian employment data. 

Surprisingly weak labour market likely to put pressure on the CAD

“Probably only another strong labor market report – especially compared to the US data – could fuel expectations for a further BoC rate step, which is likely to support CAD. Strong data could certainly lead to rate cuts, which the market has clearly priced in for this year, being postponed, i.e. narrow the gap to market Fed rate expectations, a fact that should also benefit the Loonie.”

“As regards the simmering uncertainty on the market possible CAD gains as a result of strong labour market data should remain limited though. A surprisingly weak labour market on the other hand is likely to put pressure on the Loonie.”