It is questionable whether another positive surprise from the labor market and continued strong wage growth will convince the Bank of Canada (BoC) to raise interest rates again. Probably the labor market would have to surprise significantly to the upside and at the same time, the inflation figures due in three weeks' time would have to show that inflationary pressures have persisted.

A strong labor market report is likely to cast doubt on whether the BoC will start cutting interest rates any time soon, as the market currently expects. After all, continued strong wage growth combined with solid job creation should argue for continued strong inflationary pressures, which could necessitate a ‘high for longer’. The CAD should benefit from this.

However, if the economists surveyed are right (for October, the surveyed economists expect a rather moderate job creation of 22.5K), or if job creation surprises to the downside, there is much to suggest that rate cuts are increasingly on the agenda. Given the speculation that the Fed will hike again, this would cause USD/CAD to move slightly higher.