FXStreet notes that the Canadian labour market defied expectations and added back 289k jobs in May. Economists at TD Securities think USD/CAD is basing out mostly since it already front-loaded the data and set the initial target at 1.38.

“The Canadian labour market added back 289k jobs in May for the first signs of life since COVID-19 shut down large parts of the economy. Hours worked rose at a faster rate than total employment with a 6.3% m/m increase. The unemployment rate drifted higher to 13.7% (TD: 13.5%, market: 15.0%), but this was driven by higher participation.”

“With risk assets, like CAD, already front-running some of the shift in the data, we don't expect USD/CAD to march much lower from here. On risk and global growth dynamics, USD/CAD still looks cheap, implying a move back to 1.38. For USD/CAD, we prefer buying rather than chasing the move lower.”

“We expect extremely easy monetary policy to remain in place for the rest of the year, but if April was in fact the low tide mark for the economy, then it suggests that we're not likely to see much more stimulus from either the BoC or the government.”