USD/CAD bounces back strongly to near 1.3500 after US/Canada Employment release
- USD/CAD rebounds strongly to near 1.3500 as the US Dollar reverses losses after the release of the US NFP data for August.
- Fewer-than-expected US job growth boosts expectations of Fed interest rate cuts this month.
- Canadian jobless rate rises further to 6.6%.
The USD/CAD pair recovers swiftly to near the round-level support of 1.3500 in Friday’s American session. The Loonie asset turns volatile after the release of the United States/Canada Employment data for June.
The US Nonfarm Payrolls (NFP) report showed that labor demand turned out weaker-than-expected. Number of workers hired were 142K, lower than the estimates of 16K but higher than the prior release of 89K, downwardly revised from 114K. The Unemployment Rate fell to 4.2%, as expected from the prior release of 4.3%.
Meanwhile, Average Hourly Earnings accelerated at a faster-than-expected pace. Annually, the wage growth momentum rises to 3.8% from the estimates of 3.7% and the prior release of 3.6%. This has renewed fears of price pressures remaining persistent. However, it is unlikely to influence market speculation for Federal Reserve (Fed) interest rate path as the central bank is more focused towards preventing job losses.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, recovers its intraday losses and rises to near 101.20.
In Canada, the labor market witnessed fresh addition of 22.1K job-seekers. The labor growth was slower than expected as market participants estimated fresh hiring of 25K workers. In July, Canada’s labor market data faced an unexpected drawdown as 1.4K employees were laid-off. Meanwhile, the Unemployment Rate rose further to 6.6%, higher than the estimates of 6.5% and the prior release of 6.4%.
Average Hourly Earnings decelerated sharply to 4.9% from the former reading of 5.2%. Rising jobless rate and easing wage growth momentum would prompt expectations of more interest rate cuts by the Bank of Canada (BoC).