CAD: Weakness in labour force expected to keep the unemployment rate at 7% - RBC CM

Sue Trinh, Senior Currency Strategist at RBC Capital Markets, suggests that event risk will remain elevated to end the week with the release of the Canada’s November employment report.

Key Quotes

“RBC is below consensus at -20K (cons. -15K), with the decline expected to be concentrated in goods producing industries (a 15K drop after a 20.7K jump in October). This mainly reflects some retracement in construction employment, which rose 23.8K in October, with the November report expected to show a 16K drop in this sector. Hiring in services is also expected to decline but by a more modest 5K, with the decline concentrated in educational services.”

“The overall decline does not imply that greater economic weakness is taking hold but rather that it is offsetting the outsized gains over the last three months that averaged 45.8K. Weakness in the labour force is expected to keep the unemployment rate at 7%. The ongoing technical correction in USD/CAD features support at 1.3265 and 1.3205, with resistance at 1.3378 and 1.3463.”