The USD/CAD pair loses ground as the US Dollar struggles amid increasing expectations of a Fed rate cut in September. The upcoming US Nonfarm Payrolls report is expected to show an increase of approximately 75,000 jobs in August.
In addition, Canada has announced plans to provide financial assistance to domestic producers impacted by US tariffs.
USD/CAD halts four-day winning streak
Trading around 1.3810 during the Asian session on Friday, USD/CAD halts its four-day winning streak. The pair depreciates as the US Dollar faces challenges, fueled by softer-than-expected job data from the US. Traders are closely watching labor market figures, which may influence the US Federal Reserve’s policy decision in September. Economists forecast a rise of 75,000 jobs in the US Nonfarm Payrolls for August, with the Unemployment Rate expected to be 4.3%.
US Dollar faces pressure from rising rate cut expectations
Further disappointing data could increase the likelihood of a rate cut by the Federal Reserve in September, potentially putting additional downward pressure on the Greenback. According to the CME FedWatch tool, there is now over a 99% probability of a 25-basis-point rate cut by the Fed at its September meeting, up from 87% a week ago.
US job data falls short of expectations
In the week ending August 30, US Initial Jobless Claims rose to 237K, surpassing the prior reading of 229K and coming in above the consensus estimate of 230K. Meanwhile, the ADP Employment Change report showed an increase of 54,000 jobs in August, below the expected 65K. This follows a revised 106K increase (up from 104K) in July.
US-China trade tensions and Canada’s response
US President Donald Trump announced that his administration would impose tariffs on semiconductor imports from companies not relocating production to the US, according to a Reuters report late Thursday. Additionally, the Trump administration is reportedly preparing to renegotiate the US-Mexico-Canada trade agreement, as per The Wall Street Journal.
In response, Canada unveiled plans to provide financial support to domestic producers affected by US tariffs, focusing on the steel, aluminum, and automobile industries. Industry Minister Mélanie Joly stated, “We’re working hard to support these industries, and more measures will be announced soon.” Prime Minister Mark Carney added that negotiations with the US are now focused on these sectors, stressing their importance to the supply chain.
Traders await Canada’s labor market report
Traders are also awaiting Canada’s upcoming labor market report, due later in the North American session. The Net Change in Employment for August is expected to show a gain of 7.5K jobs, following a 40.8K decline in the previous month. The Unemployment Rate may rise to 7% from 6.9%.
