The USD/CAD pair was little changed in weak trading on Monday as market participants pondered the latest US jobs data, which indicated some moderation. These macro numbers also fueled expectations that the Federal Reserve may be nearing the end of its monetary tightening cycle.
Data on Friday showed that the US economy added 187k jobs in August, beating the market consensus of 170k.
August was the third consecutive month that job growth remained below the 200k mark, indicating a gradual easing in labor market conditions.
The unemployment rate rose to 3.8% in August from 3.5% in July, the highest level since February 2022.
The number of unemployed rose by 514,000 to 6.355 million, and employment rose by 222,000 to 161.484 million.
Data showed that average hourly wage growth has moderated.
Moderate inflation and an easing in the labor market have boosted hopes that the US economy will not slow sharply and achieve a soft landing.
Still, Citi analysts wrote in a research note that “stubborn wage and price inflation will lead to longer-term higher policy rates and eventually a more pronounced slowdown in economic activity.”
Market participants will be closely monitoring a number of public appearances by Federal Reserve officials this week for monetary policy cues. The Federal Open Market Committee (FOMC) meeting is expected to take place on September 19-20.
Futures markets are pricing in a 93 percent chance that the Federal Reserve will leave interest rates unchanged this month. Also, according to CME’s FedWatch tool, there is over a 60% chance of no further rate hikes this year.
Meanwhile, the Bank of Canada is expected to keep its overnight interest rate unchanged at 5% at its September 6 monetary policy meeting, after twice raising it by 25 basis points in June and July.
At 7:36 GMT on Monday, USD/CAD was up 0.02% to trade at 1.3590 while trading within a tight daily range.
Today is Labor Day in the United States and markets are expected to remain closed.
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