CAD flows: CAD firmer as employment rises more than expected
USD/CAD drops below 1.40 as employment rises much more than expected in Septmber, but trend remains weak
A much stronger than expected Canadian employment report, with total employment rising 60.4k in September and full time employment up 106.1k. However, after two months of declines, the 3 month average is still negative, and the trend does still seem to be deteriorating. Even so, with the rise coming in well above the consensus of 2.8k, the market response is understandably CAD positive, with USD/CAD dropping an initial 40 pips to trade back below 1.40 at 1.3980. USD/CAD was trading a little below the level suggested by yield spreads, but with US yields a little lower on the day, the spread with the US has narrowed and USD/CAD now looks likely to hold below but close to 1.40.
