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Canadian dollar jumps as USD weakens after US jobs miss
USD/CAD fell 0.53% to about 1.3940, with the odds of a September Fed hike dropping to 42% from 55% a day earlier, according to CME FedWatch.
USD/CAD slid sharply on Friday, trading near 1.3940, down 0.53% on the day and reaching its lowest level since June, as investors reacted to a significantly weaker-than-expected US employment report.
FXStreet cited US Bureau of Labor Statistics data showing Nonfarm Payrolls fell by 23K in July versus expectations for an 80K gain, with revisions cutting prior months by a combined 103K jobs. Even as the unemployment rate edged down to 4.1% from 4.2%, annual average hourly earnings growth slowed to 3.2%, reinforcing signs of a cooling labor market.
The weaker US data also pushed back expectations for Federal Reserve tightening, with CME FedWatch Tool odds for a 25-basis-point rate hike at the September meeting falling to 42% from 55% a day earlier. FXStreet added that comments from Federal Reserve Richmond President Thomas Barkin did not support the US dollar, as he framed the jobs picture as low hiring and low firing rather than outright deterioration, while noting corporate earnings remain strong.
At the same time, Canada provided extra support for the Canadian dollar. Statistics Canada reported the unemployment rate fell to 6.4% in July, while employment rose 75.1K versus forecasts for 15K, and labor force participation increased to 65.1%, adding further downside pressure on USD/CAD.