Canadian employment surprised well to the upside with job growth of 154K in November, smashing the market consensus for 37.5K. A much stronger jobs number alongside a disappointment in US payrolls leaves the CAD in a decent position to outperform into next week's Bank of Canada (BoC) meeting, according to economists at TD Securities.

A lot of bad news looks to be in the price

“The November employment report crushed expectations with job growth of 154K, over 4x the market consensus for a 37.5k print. Full and part-time employment both saw large gains while unemployment fell to 6.0%, hours worked rose by 0.7% MoM, and wage growth accelerated to 3.0% YoY.”

“A strong jobs print alongside a well-priced hawkish Fed suggest that USD/CAD could be forming a short-term top in 1.28/29.”

“As for the BoC, they are likely to take a pass at announcing anything major next week but given CAD price action in recent weeks, we suspect a lot of bad news is in the price and risk/reward looks more favorable on betting on a hawkish surprise.”