USD/CAD cracks on upbeat Canadian labor market data

The USD/CAD pair faces an intense sell-off as Statistics Canada has reported better-than-anticipated labor market data. The Canadian labor market witnessed fresh additions of 39.9K payrolls in August, more than doubling the expectations of 15K. In July, there was a retrenchment of 6.4K. The Unemployment Rate remains unchanged at 5.5% while investors forecasted a higher jobless rate at 5.6%.

Annual Average Hourly Wages rose to 5.2% vs. the former release of 5.0%. Decent wage growth could elevate consumer spending momentum and keep inflationary pressures sticky. This could force the Bank of Canada (BoC) to raise interest rates one more time after pausing them in the past two policy meetings.

Meanwhile, the S&P500 is expected to open on a flat note, considering mixed cues from overnight futures. The US Dollar Index (DXY) remains well-supported near the 105.00 resistance as investors remain mixed between global uncertainty and support for a skip in the policy-tightening spell by Federal Reserve (Fed) policymakers for the September policy meeting.

The US Dollar remains firm as the United States economy is resilient due to cooling inflation and stable labor growth. Chicago Fed Bank President Austan Goolsbee said the central bank is aiming to push the economy to a “golden path,” meaning a situation where inflation recedes without triggering a recession.

The US job market is getting stronger as the Jobless claims came in below expectations for the third straight week. The US Department of Labor reported that individuals claiming jobless benefits for the first time dropped to 216K for the week ending September 1, less than the 234K expected and the former release of 229K.