CAD Faces Downward Pressure as Jobs Data Weighs on Currency

TD Securities strategists are keeping a close eye on the Canadian Dollar (CAD) as it faces downward pressure against the US Dollar. The Bank of Canada's (BoC) assessment of the labour market remains unchanged, despite a softer August labour report. Weaker employment momentum and slower wage growth have weighed on the CAD, with USD/CAD expected to remain anchored around 1.39 in the near term.

The Canadian jobs report showed a downside surprise, while the US payrolls report saw a stronger-than-expected reading. This combination has overwhelmed any temporary support from the BoC's hawkish tilt, and the strategists expect CAD to underperform its peers going forward.