Canadian employment (August) preview - TD Securities

"The August jobs report is shaping up to have a dovish tinge, with a sharp pullback in job growth and a tick higher in the unemployment rate," TD Securities analysts argue.

Key quotes

"We see a high bar for the release to derail October rate hike expectations, which remain well priced above 80%, as the labour market remains tight and the Bank of Canada will be inclined to look through monthly volatility in LFS employment especially given the past strength."

"The loonie will have to digest both the US and Canadian reports, leaving the broad USD impact on the US side to set the tone. A softer US report could weigh on the USD, especially as positioning looks stretched. Still, we think USDCAD dips will be shallow and short-lived, leaving the 1.31 level to hold into the weekend. We stay short CAD versus European crosses like EUR and NOK and tactically like a move to 0.96 in AUDCAD."

"Any print within 15k of the consensus forecast should not have a significant impact on rates markets, as both the BoC and markets understand the LFS figures are relatively volatile."