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MNI: ### POV: CANADIAN JOB MARKET FIRING ON ALL CYLINDERS, CAD UNDERPRICED FOR
BOC TIGHTENING...
*As is always the case, the Canadian jobs report played second fiddle to Nonfarm
Payrolls despite the former being far more insightful.
*Friday's Canadian job gains were the third biggest beat on expectations in
recorded history and the two-month average is now the second highest ever.
*And yet, USD/CAD fell just 0.6% over the day, not even in the top decile of
sessions by CAD strength since 01/01/2017. Is the market under-estimating the
scope for BoC tightening?
*61% of economists (11/18) surveyed see the BoC hiking rates by 25bps on Jan17.
Every single economist that expects an unchanged rate decision submitted their
forecast before Friday's jobs numbers. As such, there is material risk that
these submissions will need to be tweaked and the CAD price will have to adjust
as a result.
* MNI Pinch sees the market pricing an 80% chance of a rate hike - and CAD may
need to play catch-up.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com