The USDCAD currency pair was trading almost flat the day after the release of downbeat jobs data from the Canadian and US dockets. The nonfarm payrolls released from the US missed expectations, as did the labour market report from Canada, leaving both currencies weak.
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The US nonfarm payrolls were recorded at 187,000 new jobs, missing analysts’ consensus estimates of 205,000 new jobs. The lower job numbers hurt the US dollar since they demonstrate that the US jobs market is finally showing signs of weakening.
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On the other hand, the Canadian labour market survey also indicated that the country shed 6,400 jobs, disappointing investors and analysts alike, expecting the country to add 24,600 jobs in July. According to Statistics Canada, the Canadian unemployment rate remained stable at 5.5%, as expected.
The US unemployment rate also beat analysts’ expectations by falling to 3.5% from the previous figure of 3.6% and the consensus estimate of the same percentage. Furthermore, the country’s underemployment rate fell to 6.7% from the previous figure of 6.9%.
However, average hourly earnings in both the US and Canada remained robust, with the US print coming in at a monthly 0.4%, beating estimates by 0.1%, and the annualised print at 4.4%, beating estimates of 4.2%.
Average hourly earnings in Canada were recorded at 5.0%, much higher than the previous print of 3.9%. The jobs data will significantly affect whether the Federal Reserve and the Bank of Canada will continue hiking interest rates.
A weak jobs market is likely to dissuade the central banks from hiking interest rates, while a robust jobs market usually tends to attract more rate hikes from the central banks. However, the Fed and the BoC watch other fundamental indicators, including the inflation figures, before making interest rate decisions.
As we end the week, the US and Canadian dollar remain weak. Both currencies have fallen significantly against their peers. Investors will look forward to seeing if the currencies rally higher next week.
The USDCAD price chart.
The USDCAD currency pair traded almost flat for the day as the US and Canadian dollars remained weak.
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