The Canadian labour market went through a soft patch over the summer, as jobs
were lost on a net basis for three months in a row. Each time, these losses in net
employment came at odds with the market expectations of monthly gains, and yet
again the Bloomberg consensus looks for a tentative rebound today (20k in
September). The eventuality of another disappointment on the jobs front would
subsequently raise the prospects of the BoC having to turn more cautious at its
October meeting, and thus being likely to fall behind the Fed’s tightening cycle
especially if the US jobs report again comes out on the strong side of things. What
is more a risk case in our view would possibly revive the widening pressures in
USD-CAD rates differentials and thus see the CAD losing extra appeal to the
benefit of the USD, although global risk appetite and commodity prices have
recently been more potent drivers for USD/CAD.