• Canada’s economy added 63,800 jobs, in September more than tripled expectations
• Canadian wages rose 5.3% vs 5.1% eyed and a 5.2% prior
• BOC rate hike odds rise to 41.6% for the October 25th meeting

North America had quite an impressive hiring spree in September.  Much of the attention went to the US NFP report, but Canada quietly outperformed their neighbor.  Canada delivered robust job and wage gains, while the US saw impressive hiring but softening wages. It is clear that FX markets are thinking the chances of the BOC hiking again are  greater than it is for the Fed.  The Canadian dollar is rallying strongly against the dollar and that could accelerate if Wall Street believes financial conditions are tight enough and the Fed won’t need to hike rates again.

Oil

A bottom for crude prices are also supporting flows towards the loonie.  Crude prices are trying to find a floor now that the macro backdrop shows the US economic resilience is not going away.  Oil’s major correction is almost over but this last surge in the dollar post NFP could see WTI crude eye the $80 level.  This payrolls report is actually a positive for the US economic resilient story and that should mean this last thrust lower will form a major bottom.

Energy traders were not surprised by Russia’s decision to lift its diesel export ban for supplies delivered to ports by pipeline.  Storage facilities were getting filled up and the lower prices for the domestic market were taking hold.

WTI crude’s bad week shouldn’t turn into a sustained bearish trend given how tight the physical markets will remain.  If bond market chaos remains and the 10-year Treasury yield surges above the 5%, then oil might have one last selloff before a bottom is in place.

Exxon’s takeover of Pioneer is a huge M&A deal that reminds the energy space that there is still a lot of potential in the energy space.  The further consolidation in the energy space will likely be a dominant theme given how tight financial conditions are becoming.

USD/CAD Daily Chart

Price action on the USD/CAD daily char is showing a key top was made yesterday. If bearish momentum remains in place key support will come from the 50-day SMA, which currently resides at 1.3523. To the upside, the 1.3800 remains a key price barrier.

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