CAD flows: CAD makes modest gains on employment report

Strong Canadian employment numbers have sent USD/CAD modestly lower, although the impact has been small and Canadian yields are only slightly higher. The details are slightly less impressive than the headlines, with the headline rise of 37.3k and a fall in unemployment to 5.7% from 5.8% masking a fall of 11.6k in full time work. The BoC will also be relieved to see wage growth slow to 5.3% yr/yr from 5.7%.  

For USD/CAD, we don’t see a lot of downside on the data, with the details being less impressive and with the sharp decline through December having already put it on the low side of yield spread based estimates. Expect it to hold above 1.34.