Canadian Dollar Gains Capped by Weak August Jobs Report

The Canadian Dollar (CAD) has seen its gains against the US Dollar (USD) capped by weakness in the August labour report, according to TD Securities strategists. The report showed weaker employment momentum and slower wage growth compared to expectations.

TD Securities notes that while the Bank of Canada's assessment of the labour market may not be significantly impacted by the softer jobs numbers, the combination of a downside surprise in Canadian jobs and a stronger-than-expected US payrolls report has weighed on the CAD. This has led to USD/CAD remaining anchored around 1.39 in the near term.

The strategists expect the CAD to underperform its peers as its relative appeal fades due to greater uncertainty around other central banks' policy paths. The recent hawkish tilt from the Bank of Canada may provide temporary support, but this is unlikely to outweigh the impact of the weaker jobs report and stronger US payrolls.