CAD: Economy sheds jobs
The Canadian economy surprisingly shed jobs in June. In data released on Friday, the unemployment rate increased to 6.2% (cons. 6.1%) as 5k jobs were lost. This is the first decline in jobs since last December and supports the case for the BoC to keep rates on hold, and call into doubt the BoC’s hawkish stance. Earlier last week, the Business Outlook Survey from the Bank of Canada (BoC) showed continued strength in the business sector, investment rose sharply and hiring intentions also rose. Importantly, companies become increasingly concerned on pressures on inflation, the BoC said.Inflation expectations exceeded the banks 3% range, signalling that the bank may take this as a sign that rates should not be lowered from here (3%). Although other surveys are solid, our one-month USDCAD forecast at 0.97 may be at risk if the market believes the BoC would need to return to a dovish track.